By: Andria Pichidi
FX News Today
- Australia’s 10-year rate fell -2.7 bp, as the RBA slashed the cash rate by 25 bps to a record low of 1.00%, citing the slowdown in global trade.
- US President Trump may have signaled that talks with China have already restarted, but the US reportedly also expanded a list of European products that may get hit with tariffs, which highlights that the restart of US-Sino trade talks doesn’t mark the end of global trade tensions.
- Stock markets already turned cautious again in Asian trade.
- US futures are marginally higher and the WTI future is trading at $59.13 per barrel.
- European stock futures are moving higher in tandem with US futures after a lackluster session in Asia.
- Meanwhile weaker than expected German retail sales at the start of the session confirmed that the weakness in the manufacturing sector is spreading to the rest of the economy, which will keep the ECB on course for further easing.
- EU leaders will meet again to resume discussion on the next president of the European Commission and other top posts that will become vacant this year, including the ECB presidency.
Charts of the Day
- jumped to 0.6985 at the Asia session amid the RBA announcement, after the decline seen yesterday on Dollar strength. The asset manages to hold above 20- and 50-day SMA. A trade above 0.7000 which is the midpoint on yesterday’s decline could suggest further upside path for AUDUSD. Support comes at the 2-day low, at 0.6955. A shift back to the latter could open the doors towards June’s values.
- faded to 7-session lows of 1.1275, down from the 1.1360 highs seen ahead of the NY open. Weaker European PMI data, along with more dovish ECBspeak, saw sentiment toward the Euro soured some. For the USD side of the equation, markets have toned down their Fed rate cut expectations, leaving the odds of a 50 bp cut in July a long shot. As a result, the Dollar has posted gains, helped by the trade truce agreed over the weekend. There are still likely to be further trade fireworks going forward, but as long as the US economy continues to outperform rivals, USD downside should be limited going forward.
Main Macro Events Today
- Construction PMI (GBP, GMT 09:30)
- The June construction PMI is seen rebounding to 49.4 after 48.6 in May.
- Manufacturing PMI (CAD, GMT 14:00)
- The Markit Manufacturing PMI in Canada is expected to come out at about 49.0 in June, slightly below the 49.1 in May.
- BoE’s Governor Carney speech (GBP, GMT 14:05)
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