The US economy is showing signs of resilience. Here's the latest:
The US durable goods report was surprisingly strong.
Scotiabank, Capital Economics, and others point out that CAPEX seems to be picking up momentum.
As expected, the Fed's William Dudley (who is highly influential on the Federal Open Market Committee) telegraphed to the markets that the recent market turmoil makes a September rate hike "less compelling." Of course, the Fed is just as concerned about falling inflation expectations, which have resulted in higher real rates (tighter effective monetary conditions).
Futures now point to a just over a 50% chance of rate hike before year-end. A delayed rate hike should (in theory) limit the dollar's appreciation, which may be marginally helpful for the US economy.
Signs of any "financial stress" in the US have been quite limited thus far.
The Eurozone is also not seeing signs of any material financial stress as interbank transaction volumes remain low.
Housing in the US is expected to be accretive to GDP growth.
GDPNow, the Atlanta Fed's US GDP tracker, still shows poor Q3 GDP growth relative to what sell-side economists have been predicting, but the indicator is improving.
Now lets look at some trends in the currency markets.
The euro had a quick pop on Dudley's dovish speech, but continued to decline on returning risk appetite. Yes, the euro is a "safe haven" currency these days.
The chart below shows the correction in the Australian dollar over the past few years - driven by the end of commodities super-cycle. Time for a bounce?
In China, the impact of Peoples Bank of China's liquidity injections is finally becoming visible in lower money market rates (repo rates shown below). Lets see how much lower they will push this.
Turning to energy, US crude oil inventory fell more than expected last week, but remains highly elevated relative to historical levels for this time of the year.
US crude oil production still seems to be rising. It's hard to see how this is sustainable at current price levels, but some nimble firms continue to increase output.