3 July: US$ underpinned by safe-haven demand on the back of trade tensions. RBA Meeting in focus today.

By | July 3, 2018

 

Much of Monday has seen the US$ recover its losses from Friday, with the Euro leading the way, under pressure because of the threatened split in the German Coalition. This has been partially turned around, late in the US session, because an agreement on migration policy has been hammered out between Angela Merkel and the Interior Minister, Seehofer, to reach a compromise agreement which has allowed the Euro to recover from its lows. Elsewhere, risk aversion dominated Monday trade, beginning in Asia, with Chinese stocks down another 2.5%, and then spreading to Europe. The increasing threat of trade tariffs has been the driving force, underpinning the dollar and pushing European stocks lower, and  with China’s retaliation to the US imposition of sanctions set to come into effect later this week, it would seem that the trend is set to continue.

In other markets, the currencies were mixed, although the Aud and Kiwi remain heavy – weighed down by the trade concerns, – while US stocks have ended the day about 0.2% firmer. Gold continued its downward slide – possibly giving us a hint of a stronger US$ ahead -, while oil has paused for breath after its strong run higher, and WTI currently sits at 74.00pb.

The main event on Tuesday will be the RBA Meeting, at which no change is expected to policy, so all eyes will be on the Statement. This is likely to be relatively upbeat but the RBA would like a lower currency so we may see a bit of volatility. Before the RBA, the Australian Building Permits for May will be released (exp +1.0%mm, 9.9% yy). Europe will look t the UK Construction PMI and the EU Retail Sales (exp 0.1%/1.4% mm/yy) and PPI (0.4%/2.4% mm/yy), while the US will see the May Factory Orders and Total Vehicle Sales. Kiwi traders should note that the GDT Price Index will be released at around lunch time in London.

CURRENCIES
EURUSD: 1.1636
Res  1.1650  1.1690  1.1720
Sup  1.1615  1.1590  1.1550
USDJPY: 110.86
Res  111.05  111.20  111.40
Sup  110.60  110.30  110.00
GBPUSD: 1.3138
Res  1.3165  1.3195  1.3215
Sup  1.3120  1.3095  1.3070
USDCHF: 0.9934
Res  0.9965  0.9980  1.0000
Sup  0.9910  0.9890  0.9855
AUDUSD: 0.7337
Res  0.7345  0.7365  0.7385
Sup  0.7310  0.7285  0.7250
NZDUSD: 0.6711
Res  0.6735  0.6765  0.6795
Sup  0.6690  0.6655  0.6620
INDICES / COMMODITIES
S&P.fs: 2726
Res  2730  2740  2750
Sup  2715  2700  2690
DJ30.fs: 24277
Res  24370  24490  24560
Sup  24200  24075  23975
SPI200.fs: 6156
Res  6170  6185  6200
Sup  6135  6115  6100
XAUUSD: 1241.75
Res  1245  1250  1255
Sup  1240  1235  1230
XAGUSD: 15.83
Res  16.00  16.10  16.20
Sup  15.75  15.60  15.50
WTI.fs: 74.00
Res  74.45  75.00  76.00
Sup  73.40  72.90  72.20