Quick Recap
The US dollar was stronger across the board overnight. While some credit is being given to the better than expected data in the States the reality is that the market had already moved before the data was released Stateside.
So to a certain extent it feels like Greece may have been more important than the data but overall the Dollar is strong nonetheless.
As I wrote at Business Insider this morning, on the data front, the key was that the “Fed’s tightening bias was reinforced with a solid ISM print for May in the US. The print of 52.8, up from 51.5 last and 52 expected, and the big beat in construction spending which was up 2.2% showed the US economy might be as strong as the Fed is postulating in this second quarter. Personal consumption was flat but incomes rose 0.4% while inflation, as measured by PCE price index, was up 1.2%.”
That helped US markets rally a little but in the UK the FTSE dipped after the Markit PMI missed. Europe was mixed.
A Greek exit is likely to cause a bit of a kerfuffle in markets and it is getting closer by the day. At present the ECB, IMF, France and Germany are meeting to try to find a solution for the mess but it seems the parties are as far away as ever.
Here in Australia there is a huge event risk for the Aussie dollar and Aussie crosses with the release at 2.30pm of the RBA Boards decision on monetary policy. Widely expected to keep rates on hold this won’t be a non-event because the words that Governor Stevens uses around the easing bias, soft or explicit, will drive interest rate futures and the Aussie dollar.
My sense is that this is the best opportunity the RBA has had in years to really drive the Aussie dollar lower. As long as it gets its words right. Here’s the piece I wrote at Business Insider this morning.
Elsewhere China ripped higher again yesterday proving the bull’s not dead. This dragged Dalian iron ore higher and it’s only just below the highs of the recent run. That’s phenomenal. Elsewhere on commodity markets things were fairly calm for the main ones we watch.
On the day
On data, the RBA at 2.30pm is the big one today in Australia. Look at the last paragraph to guage whether we have a soft easing bias or something more explicit. We also have Korean CPI released, while Australia’s quarterly current account will feed into GDP tomorrow. Tonight we get German unemployment,UK CPI, EU CPI, US Redbook and ISM New York.
Here’s the overnight scoreboard (7.30am AEST):
- Dow Jones up 0.16% to 18,040
- Nasdaq up 0.25% to 5,082
- S&P 500 up 0.21% to 2,111
- London (FTSE 100) down 0.44% to 6,953
- Frankfurt (DAX) up 0.19% to 11,436
- Paris (CAC) up 0.35% to 5,025
- Tokyo (Nikkei) flattish 20,569
- Shanghai (composite) Boing, can’t keep a good bull down – up 4.72% to 4,829
- Hong Kong (Hang Seng) up 0.63% to 27,597
- ASX Futures Overnight (SPI June) -15 to 5,744
- US 10 Year Bond down 2.18%
- Australian 10 year bond up 2.76%
- AUDUSD: 0.7603
- EURUSD: 1.0924
- USDJPY: 124.78
- GBPUSD: 1.5201
- USDCAD: 1.2516
- Crude: $60.28
- Gold: $1,189
- Dalian Iron Ore (September): 422
CHART OF THE DAY: Euro
The answer to yesterday’s question “Can the Euro really keep rallying?” was clearly no as it has slipped below it’s short term uptrend overnight. We flagged that yesterday afternoon and Euro lookos biased lower now that the consolidation we’ve been talking about has probably finished.
What we have ended up with is a 90-point range. 1.0886-1.0977
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