Lower equity markets overnight led by a further rise in Covid cases in the US and continued tensions between China and India, and North and South Korea. Trump signed the Uighur rights bill (a minority rights bill) which will likely keep tensions with China heightened. The S&P500 is down 0.4% on the day, with bond yields and currencies broadly unchanged. Oil dropped 1.8%, copper rose 0.9%, iron ore fell 1.6% to $103.20, and gold rose 0.1% whilst US yields were marginally lower.
- The US dollar index rose by 0.2%.
- EUR dropped from 1.1294 to 1.1297
- USD/JPY declined 107.40 to 107.04.
- AUD traded between 0.6865 and 0.6925.
- NZD range was 0.6435 and 0.6475.
- AUD/NZD range was 1.0660 and 1.0695
May Unemployment data will be watched closely by the market with expectations the Unemployment Rate in May to rise to 6.9% from 6.2% in April.
Previewing the data and its potential impact AUD/USD, upbeat numbers will likely boost the pair towards the critical 0.7000 threshold, although gains beyond this last may be short-lived. A slump on a disappointing outcome could see the pair falling towards 0.6830 first, and to the 0.6770 price zone later, where bulls are expected to take their chances. A bearish extension below this last will be possible if dismal numbers couple with risk-aversion.
Later in the session, the Reserve Bank of Australia (RBA) will release its Bulletin as well.
Event Risk Data Today
Australia: May Unemployment – markets expecting a rise in the unemployment rate (f/c: 6.9%), factoring in the reclassification of JobSeeker recipients as unemployed
New Zealand: Q1 GDP - market sentiment is that Q1 GDP growth will come in around -1.1%
UK: BoE meeting - expectations to hold the Bank Rate at 0.1% and expand their QE program.
US: June Philly Fed Index – expectations to recover to -22.9 given new orders and shipments picked up in May. US jobless claims also to be watched for