Quick Recap
Apologies for the interruption to services over the past couple of days the storm really hit Port Stephens, and the Hunter, where I live hard. We’ve lost the internet again but thank goodness for Macca’s.
Anyway to the markets and last night’s highlight was the release of existing home sales in the US which more than doubled expectations with a lift of 6% over the month before. That drove US 10 year Treasuries up 7 points to 1.98% and reinforced the notion that the Fed is on track to tighten rates this year.
Of course the Fed has told us that explicitly with their ‘dot chart’ but also last week Stanley Fischer, Fed Vice Chair, reiterated it. That’s important in constraining the Euro below the downtrend line stretching back to the start of the big fall last December. That also means that it’s going to be difficult for any other currencies to push sustainably higher against the US dollar unless Euro gets a wriggle on.
Last night though Sterling did get a solid lift on the back of the slightly more hawkish BoE MPC minutes which focused on the chances of an increase in inflation and as a result highlight the next move is likely to be up, not perhaps down as BoE Chief Economist Haldane suggested a few weeks back.
Interest rate movements matter.
In other markets iron ore is rallying again with Dalian back above 400 at 403, gold fell out of bed after the US dollar was stronger and on the back of the persistence of stock market rallies and overall lack of volatility. At $1187 this morning it is only $4 off the range low for the last few months. A break of $1,180 could trigger a big m0ve.
On the day
On the data front today quarterly NAB Business Survey is due out. This survey is similar to the monthly survey but the list of respondents is much larger. It will be interesting to see if there is any difference between the monthly and quarterly surveys. Elsewhere its ‘flash’ PMI day for China and around the world. That’s important. Tonight we have a jobless claims in the US and UK retail sales.
Here’s the overnight scoreboard (7.00 am AEST):
- Dow Jones up 0.49% to 18,038
- Nasdaq up 0.42% to 5,035
- S&P 500 up 0.57% to 2,107
- London (FTSE 100) down 0.49% (BoE worries) to 7,028
- Frankfurt (DAX) down 0.6% to 11,867
- Paris (CAC) up 0.36% to 5,211
- Tokyo (Nikkei) 20,113 up 1.13%.
- Shanghai (composite)up 2.47% to 4,399
- Hong Kong (Hang Seng) up 0.3% to 27,933
- ASX Futures (SPI June) +14 at 5,837
- AUDUSD: 0.7750
- EURUSD: 1.0723
- USDJPY: 119.85
- GBPUSD: 1.5037
- USDCAD: 1.2232
- Crude: $56.18
- Gold: $1,187
CHART OF THE DAY:
US Crude: Prices are having what you might call a natural reaction to the recent surge. The bias is still higher medium term but Crude looks like it wants to retest support.
First support is my fast moving average at $54. 57 and then the uptrend line at $53.32.
Recommended Content
Editors’ Picks
AUD/USD rises to two-day high ahead of Aussie CPI
The Aussie Dollar recorded back-to-back positive days against the US Dollar and climbed more than 0.59% on Tuesday, as the US April S&P PMIs were weaker than expected. That spurred speculations that the Federal Reserve could put rate cuts back on the table. The AUD/USD trades at 0.6488 as Wednesday’s Asian session begins.
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
Gold struggles around $2,325 despite broad US Dollar’s weakness
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Bitcoin price makes run for previous cycle highs as Morgan Stanley pushes BTC ETF exposure
Bitcoin (BTC) price strength continues to grow, three days after the fourth halving. Optimism continues to abound in the market as Bitcoiners envision a reclamation of previous cycle highs.
Australia CPI Preview: Inflation set to remain above target as hopes of early interest-rate cuts fade
An Australian inflation update takes the spotlight this week ahead of critical United States macroeconomic data. The Australian Bureau of Statistics will release two different inflation gauges on Wednesday.