Global Market Dynamics: Key Economic Movements and Geopolitical Influences

1

Vice President Kamala Harris attracted over 2.4 million donors within 11 days of becoming the Democratic presidential candidate, surpassing the total number of donors to Joe Biden‘s entire campaign. This surge in donations brought in $2.01 billion in personal contributions for her campaign and the Democratic Party, with two-thirds of donors not having supported Biden’s campaign or the Democratic National Committee previously. In key swing states like Georgia and North Carolina, Harriss number of donors significantly increased, demonstrating her campaign's growing influence in these regions.

Analysis:

• Impact on FX:Potential impact on USD as political campaigns gain momentum.

• FX Pair:USD/EUR, USD/JPY

• Impact on Shares:Positive sentiment for sectors aligned with Democratic policies.

• Companies:Democratic Party affiliates, political campaign management firms.

2

Due to delays by the U.S. Bureau of Labor Statistics (BLS) in releasing monthly employment data, at least three banks directly contacted the BLS to obtain key employment data, leaving other market participants in the dark. The final data is expected to show a downward revision of 818,000 jobs over the past 12 months, marking the largest revision since 2009. This incident raised concerns about the fairness and transparency of government data release procedures, particularly when it involves critical market-moving information.

Analysis:

• Impact on FX:Could create volatility in USD pairs due to unexpected data revisions.

• FX Pair:USD/JPY, USD/EUR

• Impact on Shares:Potential negative impact on sectors sensitive to employment data.

• Companies:U.S. labor market-sensitive companies, employment data providers.

3

The minutes from the Federal Reserve's July 30-31 meeting reveal that several Fed officials saw a case for cutting interest rates at that time, even though the committee ultimately decided to keep rates unchanged. Most officials indicated that a rate cut might be appropriate at the September meeting if upcoming data aligns with expectations. The minutes show an increasing inclination among policymakers to adopt a more balanced risk management strategy between labor market strength and inflation risks. Some analysts suggest that the Fed should accelerate the pace of rate cuts to ensure a “soft landing” for the U.S. economy.

Analysis:

• Impact on FX:Dovish signals from the Fed could weaken USD.

• FX Pair:USD/JPY, USD/EUR

• Impact on Shares:Rate-sensitive stocks may benefit.

• Companies:U.S. Treasury securities, rate-sensitive sectors like real estate and utilities.

4

Asian markets rose ahead of key central bank events, particularly influenced by expectations around Fed and Bank of Japan policies. Major Asian indices climbed amid speculation of a Fed rate cut, while the yen weakened against the dollar. Investors are eagerly anticipating the Jackson Hole Economic Symposium and Fed Chair Jerome Powells speech. Meanwhile, oil and gold prices saw slight declines.

Analysis:

• Impact on FX:Yen weakening against USD; potential market volatility.

• FX Pair:USD/JPY, AUD/USD

• Impact on Shares:Positive for Asian markets; negative for commodities.

• Companies:Asian stock exchanges, commodity traders.

5

The Bank of Korea kept its benchmark interest rate unchanged at 3.5% to control rising property prices, hinting at possible policy adjustments in October. While the central bank currently maintains a tight monetary policy, four committee members supported a rate cut within the next three months, up from two in the previous meeting. Strong export growth, particularly in semiconductors, supports the central bank's current stance. However, with inflation and economic growth risks mounting, markets expect the Bank of Korea to start cutting rates in October. The central bank also downgraded its 2024 economic growth forecast and expects inflation this year to be slightly below previous estimates.

Analysis:

• Impact on FX:Neutral to slightly dovish for KRW.

• FX Pair:USD/KRW

• Impact on Shares:Positive for export-oriented sectors; mixed for real estate.

• Companies:Samsung Electronics, SK Hynix, Hyundai Motor.

6

An impending railway strike in Canada could delay seaborne cargo, increase freight rates, and worsen congestion at U.S. ports. Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. plan to lock out over 9,000 union workers on Thursday, affecting the transportation of products like wheat, chemicals, and fertilizers. Many logistics companies have already rerouted goods from Canadian ports to U.S. West Coast terminals, but these alternative routes also face uncertainty. Additionally, Canadian port workers have threatened to strike, which could further escalate the situation. If both railways and ports in Canada are paralyzed, it could have a significant impact on the U.S. economy.

Analysis:

• Impact on FX:Potential weakening of CAD due to trade disruptions.

• FX Pair:USD/CAD

• Impact on Shares:Negative for transport and logistics companies.

• Companies:Canadian National Railway Co. (CNI), Canadian Pacific Kansas City Ltd. (CP), logistics companies.

7

TD Bank has set aside $2.6 billion in fines to address its anti-money laundering (AML) controls failures in the U.S. and plans to raise funds by selling part of its stake in Charles Schwab Corp. TD Bank expects to reach a “global resolution” with the U.S. Department of Justice and the Securities and Exchange Commission by the end of this year. The fines will lower TD Bank's Tier 1 common equity ratio. Additionally, TD Bank faces federal charges in the U.S. for allegedly bribing and aiding in money laundering by some of its branch employees. While the bank has fired the involved employees and replaced some senior management, it may still face non-monetary penalties in the future.

Analysis:

• Impact on FX:Potential weakening of CAD due to financial penalties.

• FX Pair:USD/CAD

• Impact on Shares:Negative for TD Bank and related financial institutions.

• Companies:TD Bank (TD.TO), Charles Schwab Corp. (SCHW).

8

Neuralink reported that its second brain-machine interface implant surgery was “successful,” with the patient now able to design 3D objects and play video games like Counter-Strike 2. Compared to the first patient, who had issues with electrode wires retracting from the brain, this surgery included measures to reduce similar problems, such as minimizing brain movement during the procedure and reducing the gap between the implant and the brain surface. Neuralink is also developing new features for its brain interface device, Link, which could help patients regain more complex digital autonomy and communication abilities in the future. Currently, this device is primarily aimed at quadriplegic patients. The patient, named Alex, a former auto mechanic who lost mobility due to a spinal cord injury, was discharged the day after surgery and has already designed a custom stand for his Neuralink charger using design software. Elon Musk hopes to have more patients implanted with the device by the end of the year.

Analysis:

• Impact on FX:Limited direct impact; potential innovation-driven market sentiment.

• FX Pair:USD/EUR

• Impact on Shares:Positive sentiment for Neuralink and related tech sectors.

• Companies:Neuralink, Tesla (TSLA), other tech and healthcare innovators.

9

Matt Fischer, Apple‘s App Store chief, is set to leave the company in October as part of a broader reorganization of the App Store division, which has come under scrutiny from regulators for having too much power in the mobile software market. The reorganization will split the App Store team into two parts: one overseeing Apple’s own App Store and the other handling third-party app distribution. The move is intended to address regulatory pressure, particularly to comply with new EU laws that require Apple to allow third-party app stores and payment methods. Fischer said in an internal memo that with the team restructuring, now is the right time for a leadership transition.

Analysis:

• Impact on FX:Limited direct impact; potential influence on tech sector stocks.

• FX Pair:USD/EUR, USD/JPY

• Impact on Shares:Potential impact on Apples stock; ripple effects in the app development sector.

• Companies:Apple Inc. (AAPL).

10

German Chancellor Olaf Scholz stated that Germany will continue to support Ukraine for as long as necessary, easing concerns that the government‘s budget constraints could affect aid to Ukraine. He reiterated that Germany is the largest financial supporter of Ukraine in the EU and mentioned the €4 billion allocated for Ukraine in Germany’s 2024 budget. Additionally, the G7 reached an agreement to use the profits from frozen Russian central bank assets to provide $50 billion in new aid to Ukraine. Scholz also reaffirmed support for Moldovas EU membership during his visit to Moldova, emphasizing that it is in the interest of the EU, Germany, and Moldova. Moldova plans to hold a referendum on EU membership on October 20.

Analysis:

• Impact on FX:Potential support for EUR from continued fiscal commitments.

• FX Pair:EUR/USD

• Impact on Shares:Positive for defense and reconstruction companies in Europe.

• Companies:German defense contractors, European financial institutions.

11

Singapore and Malaysia are working to transform their border region into a Shenzhen-like Special Economic Zone (SEZ) to boost both countries' economies and strengthen Malaysian Prime Minister Anwar Ibrahim‘s political standing. Negotiators from both countries aim to reach an agreement by the end of the year to designate Johor in southern Malaysia as a cross-border SEZ, attracting billions in foreign investment and creating thousands of jobs. However, past efforts to establish similar cooperation projects have failed due to political and economic reasons, and this initiative faces challenges in trust and execution. Nevertheless, if successful, the SEZ could bring significant benefits to both countries and help alleviate Singapore’s land and resource constraints.

Analysis:

• Impact on FX:Potentially positive for SGD and MYR as cross-border trade and investment increase.

• FX Pair:SGD/MYR, USD/SGD

• Impact on Shares:Positive for real estate and infrastructure development companies in the region.

• Companies:Singaporean and Malaysian real estate firms, foreign investors.

12

Australias private sector business activity grew at its fastest pace in three months, with gains in both the services and manufacturing sectors, along with increases in employment and input costs, suggesting that current monetary policy may not be enough to curb price and demand pressures. The services activity index rose to 52.2 in August, and the composite PMI also increased from 49.9 in July to 51.4. Despite this, inflationary pressures persist, with the input price index reaching its highest level since March 2023. Economists warn that this data suggests the Reserve Bank of Australia (RBA) may still need to raise interest rates further to address ongoing inflation risks.

Analysis:

• Impact on FX:Strengthening AUD due to positive economic data.

• FX Pair:AUD/USD

• Impact on Shares:Positive for domestic service and manufacturing sectors.

• Companies:Australian manufacturing and service companies.

13

Oil prices hovered near their lowest levels since January, driven by growing concerns over global demand, particularly due to signs of an economic slowdown in the United States. Despite a decline in U.S. crude inventories, oil prices remained under pressure, with Brent crude falling below $76 per barrel after four consecutive days of decline. Meanwhile, the market is focused on Fed Chair Jerome Powell‘s speech at this week’s Jackson Hole meeting for further clues on the economic outlook. Analysts suggest that while current prices are low, weather risks from the hurricane season and geopolitical tensions in the Middle East and North Africa could provide support around the $75 per barrel level.

Analysis:

• Impact on FX:Potential weakening of USD if oil prices remain low due to economic slowdown.

• FX Pair:USD/CAD, USD/NOK

• Impact on Shares:Negative for energy stocks; potential volatility in related sectors.

• Companies:Major oil companies like ExxonMobil (XOM), Chevron (CVX), and BP (BP).