- US yields drifted slowly lower through the day for 2yr treasury to test 1.80% and 10yr yields slid from 2.06% to 2.03%. Trump’s comments caused only a marginal repricing of the 31 July meeting pricing (still just below 30bps).
- Australian 3yr and 10yr government bond yields marked time with US (3yr 0.92%, 10yr 1.33%). Markets continued to price a 15% to 17% chance of an RBA rate cut in August.
- The one area of movement was a widening in the German Bund to Italian BTP 10yr spreads back above 200bps on a rise in Italian political concerns.
- Brent crude oil drifted from better levels but still held a +1% gain on the day at $63.10 as tensions with Iran remained as UK halted further shipping into the Straits of Hormuz. Gold at $1427 held in the middle of a tight ($1422-$1430) range.
- EUR hovered between 1.1207 to 1.1225
- USD/JPY slipped back from 108.05 to 107.80.
- AUD (at 0.7045) may have held 0.7030 but struggled in a tight range.
- NZD continued to mildly outperform, holding above 0.6775 into late trading
- AUD/NZD edged back towards 1.0400 (range 1.0386 to 1.0423).
- After an initial dip to 0.7030 area, the AUD/USD pair regained some positive traction and recovered a part of Friday's corrective slide from near three-month tops.
- The intraday bounce from 100-hour SMA and a subsequent move beyond a short-term descending trend-line resistance was seen as a key trigger for bullish traders.
With technical indicators on 4-hourly/daily charts holding in the positive territory and again starting to gain traction on the 1-hourly chart, the pair seems poised to extend the momentum amid reviving hopes over the US-China trade deal.
Sustained move beyond the 0.7055-60 region will reinforce the constructive outlook and set the stage for a move back towards testing the previous session’s swing high, around the 0.7080 region en-route the 0.7100 round figure mark.
On the flip side, any meaningful slide might continue to attract some dip-buying near the 0.7035-30 region (100-hour SMA), below which the corrective slide could get extended further towards testing the key 0.70 psychological mark.
Event Risk Data Today
- NZ trade balance for June is expected to be a small surplus of $100m, with both exports and imports slight lower than in May.
- US: second-tier data consists of the Richmond Fed business activity survey, and existing home sales for June.