US equity markets nudged higher, the S&P500 up 0.1% to a fresh record high, supported by strong corporate earnings. Bond yields rebounded, and the US dollar fell. US 2yr treasury yields ranged between 0.19% and 0.20%, while the 10yr yield bounced off 1.22% to 1.29%. Commodities:, Brent crude oil futures rose 0.9% to $75, copper rose 4.2%, and gold fell 0.3%. Iron ore rose 0.1% to $201.
US new home sales in June surprised with a fall to its lowest level in over a year at 676k (est. 800k), from a prior reading that was revised down to 724k from 769k. Once again, surging construction costs and supply pressures were cited, although some of those supply-chain constraints appear to be easing. The Dallas Fed activity survey fell to 27.3 (est. 32.3, prior 31.1). This still indicates a “robust expansion”, with above average manufacturing conditions (little changed at 31.0) and new orders (also unchanged at 26.8).
Overnight Currency Range
AUD/USD 0.7332 0.7390
EUR/USD 1.1763 1.1817
GBP/USD 1.3737 1.3833
USD/JPY 110.12 110.58
NZD/USD 0.6948 0.7010
USD/CAD 1.2529 1.2589
USD/CNH 6.4788 6.4945
AUD/JPY 80.74 81.51
AUD/NZD 1.0542 1.0559
Another quiet session expected ahead with tomorrow’s Australian CPI set to dominate the domestic week proceedings although they have been overshadowed by broader macro concerns for now. AUD/USD rallied in late trade overnight with offering interest now expected ahead of 0.7420 while demand remains thick back toward the recent lows of 0.7290.
Event Risk Data Today
Australia: RBA Deputy Governor Guy Debelle will speak on “Outcomes of the 3-year review of the FX Global Code” at the FX Markets US Conference 2021 (Online), 10:35 AEST.
China: June industrial profits will be a story of varying experiences across the supply chain. Upstream producers are benefitting considerably from the elevated selling prices of raw materials, but downstream manufacturers will see their margins crimped by higher input costs.
Euro Area: M3 money supply should grow at a robust 8.2%yrin June. However, we have seen a slowdown in the annual pace due to the shifting base period.
US: Ahead of the July update, the Richmond Fed Index has indicated that prices paid are beginning to crest (market f/c: 20). Durable goods orders should expand a further 2.0% in June, with investment likely to remain robust over 2021. Two house price measures, the FHFA index (market f/c: 1.6%) and the S&P/CS index (market f/c: 1.5%) will indicate broad-based growth across the nation. Conference Board consumer confidence, which initially lagged the broader economic recovery, is expected to print at 124.0 in July.