While stocks have been choppy, with the US indices down around 0.5%, the US$ is also a little lower at the end of Tuesday trade as risk aversion eased. The news that Angela Merkel averted an immediate political crisis in Germany helped the Euro out although the late rally in Chinese stocks, yesterday, provided more broad based support, underpinning commodities as well as the commodity bloc currencies which benefited by rallying sharply in early European trade and holding on to most of their gains for the rest of the day. Sterling also had a better day because the construction PMI came in at 53.1 in June, up from May’s 52.5, better than forecast and the fastest rate of growth in seven months. In other markets, Gold had a sharp $20 rally, while WTI settled slightly higher, after a volatile session, as traders watched for the prospect of fresh supply flooding the market, offsetting ongoing disruption in Canada, Libya and Venezuela, after Saudi Arabia agreed to Donald Trump’s demand to pump more oil to stabilise the market.
Wednesday will be the US July 4, Independence Day holiday so liquidity will be thin later in the session. Before then, Australia will see the May Retail Sales (exp +0.3%mm) and the Trade Balance (exp +$1,200 mio), while the global Services/Composite PMIs are also due, beginning in Asia with Australia, Japan and the Caixin figure from China. The EU will also look to the PMIs for guidance but it will then become very thin, meaning we are likely to see a sideways session, I suspect.
|INDICES / COMMODITIES|