2 July: US$, stocks firm following the G20. Attention now turns to the RBA – 25bp cut expected.

By | July 2, 2019

 

The US$ is firm an almost all fronts on Tuesday following the agreement between Donald Trump and Chinese President Xi Jinping to a trade truce, although it was kept in check by weak manufacturing data. The US ISM manufacturing data fell to its lowest level since September 2016, although it did beat expectations (51.7 vs exp 51.0). Chinese manufacturing data also failed to meet expectations and did not help the commodity currencies.

In other markets, stocks made new all-time highs, while oil was also firm on the back to the trade truce. The metals gapped lower at the Asian open but have chopped around ever since.

Aside from the ISM/China figures, the other data of note was the UK Manufacturing PMI which came in at the lowest reading in 7 years (48.0 vs exp 49.2), care of the Brexit confusion, and did not do Sterling any good.

Looking ahead, Tuesday will begin with the Q2 NZ NZIER Business Confidence figure but the main event of the day is likely to be the RBA Meeting at which a rate cut looks highly likely. It has largely been priced in though and if the RBA do nothing the Aud$ should fly higher, which the RBA will not want. The majority of economists surveyed by Reuters/Bloomberg do expect a cut today though, which should put added downside pressure on the Aud$. Later in the day it will be a fairly thin calendar with the German Retail Sales, UK Construction PMI, EU PPI and US Total Vehicle Sales the main points of interest. Also note that both the US API Weekly Crude Oil Stock Inventory and the Global Dairy Trade Index (London Midday) are due for release. Have a good day

Economic data highlights will include:                                                                 

Tue: NZ Q2 NZIER Business Confidence, RBA Interest Rate Decision, German Retail Sales, UK Construction PMI, EU PPI, US Total Vehicle Sales, API Weekly Crude Oil Stock Inventory, Global Dairy Trade Index

Market moves, in brief:

FX: DXY 96.84 (+0.75%)

Bonds: US10Y; 2.033% (+1.39%), German 10Y; -0.357% (-8.95%), UK 10Y; 0.82% (-2.72%), Australian 10Y; 1.365% (+2.32%), NZ 10Y; 1.585% (+0.63 %), China 10Y; 3.271% (-0.63%)

Stock Indices: DJI; +0.44%, S+P; +0.77%, NASDAQ; +1.06%, EUStoxx50; +0.69%, FTSE100; +0.97%, Shanghai Composite; +2.22%,

Metals: Gold $1385 oz (-1.85%), Silver $15.13 oz (-1.18%), Copper $2.688 lb (-0.65%), Iron Ore $119.45 per tonne (NYMEX) (+5.80%),

Oil: WTI $59.01 pb (+1.48%)

CURRENCIES
EURUSD: 1.1286
Res  1.1315  1.1345  1.1375
Sup  1.1270  1.1245  1.1220
USDJPY: 108.43
Res  108.55  108.80  109.15
Sup  108.15  107.90  107.55
GBPUSD: 1.2637
Res  1.2655  1.2670  1.2690
Sup  1.2625  1.2605  1.2585
USDCHF: 0.9874
Res  0.9900  0.9935  0.9965
Sup  0.9845  0.9810  0.9770
AUDUSD: 0.6964
Res  0.6980  0.6995  0.7010
Sup  0.6955  0.6940  0.6925
NZDUSD: 0.6673
Res  0.6685  0.6700  0.6715
Sup  0.6665  0.6650  0.6640
INDICES / COMMODITIES
S&P.fs: 2967.78
Res  2975.00  2985.00  3000.00
Sup  2955.00  2940.00  2925.00
DJ30.fs: 26703.00
Res  26810.00  26970.00  27105.00
Sup  26430.00  26290.00  26120.00
SPI200.fs: 6603
Res  6610  6620  6635
Sup  6590  6575  6560
XAUUSD: 1383.13
Res  1395.00  1405.00  1415.00
Sup  1380.00  1370.00  1360.00
XAGUSD: 15.13
Res  15.25  15.35  15.45
Sup  15.10  15.00  14.90
WTI.fs: 58.86
Res  59.90  61.00  62.05
Sup  57.65  56.40  55.25

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