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Market Recap
Wall Street rebounded overnight with the Nasdaq closing up by 1.7%, the S&P 500 by 1.1%, and the Dow Jones by 0.3%. U.S. 10-year yields edged higher, while crude oil fell 0.4% to $79.70 a barrel. The USD was stronger across the board, including against the AUD, which closed at the lower end of its 0.66315/0.6702 range.
A quiet session into the London lunch saw USD/JPY climbing back towards 157 after trading as low as 156.29. The antipodes slid lower to 0.6653 (AUD/USD) and 0.5993 (NZD/USD), while EUR/USD and GBP/USD continued to 1.0903 and 1.2942, respectively.
Very little movement occurred over a quiet NY afternoon, with majors generally holding limited ranges to see out the day. GBP/USD briefly dipped to new lows of 1.2905 before recovering, while the local unit settled near 0.6640 ahead of the Sydney open.
Day Ahead
A very quiet day on the data front with little of note on the calendar.
Looking to China, Macquarie’s Thierry Wizman notes that yesterday’s PBoC easing follows a string of poor Chinese economic data recently, especially in retail sales, and a dispirited reaction to the communique emerging from the Third Plenum meetings last week.
The actions of the PBoC seem to be part of a broader structural economic and political reform plan unveiled by Chinese President Xi Jinping over the weekend. Another official announcement on Sunday upheld plans to put technology at the center of China’s economic future while tolerating slower growth in the near term.
Markets expect that the CNY will stay on the defensive due to the rate cuts from the PBoC. These cuts may only add to the already-present sense of apprehension around the prospect that China needs a cheaper CNY to support its 5% growth target for 2024.
AUD/USD chewed through significant bids on its way to a low of 0.66315 overnight. Further demand now rests at 0.6580/90, while offering interest has been lowered to above 0.6700.
Economic Data to Watch
- Japan: June Machine Tool Orders (YoY)
- Eurozone: ECB’s Lane Speaks, July Consumer Confidence
- United States: June Existing Home Sales, July Richmond Fed Manufacturing Index
Disclaimer
The information provided in this daily market update is for informational purposes only and should not be considered as financial advice. Trading Forex and CFDs involves significant risk of loss and may not be suitable for all investors. Past performance is not indicative of future results. CA Markets does not guarantee the accuracy or completeness of the information provided, and we recommend consulting with a qualified financial advisor before making any trading decisions. Users are solely responsible for their own trading activities and decisions.
