Sentiment in equity markets remained elevated, the S&P500 rising 0.2% to a fresh record high. However, bond yields fell, as did risk-sensitive currencies. Month-end rebalancing and US airstrikes in Syria and Iraq may have been factors. US 2yr treasury yields fell from 0.27% to 0.25%, while the 10yr yield fell from 1.53% to 1.47%. Australian 3yr government bond yields (futures) fell from 0.49% to 0.47%, while the 10yr yield fell from 1.61% to 1.54%.
Commodities, Brent crude oil futures fell 2.0% to $75, copper fell 0.4%, and gold fell 0.1%. Iron ore rose 0.3% to $218.
Overnight Currency Ranges
AUD/USD 0.7555 0.7601
GBP/USD 1.3875 1.3938
USD/JPY 110.50 110.97
NZD/USD 0.7033 0.7084
USD/CAD 1.2289 1.2347
USD/CNH 6.4566 6.4691
AUD/JPY 83.60 84.19
AUD/NZD 1.0724 1.0750
Risk appetite sours amid a lack of clear signals from the Fed and an absence of major data/events. After the monetary policy decisionmakers’ mixed response to the US Core PCE Inflation, Thomas Barkin, President of the Richmond Federal Reserve Bank, said on Monday, "The Fed has had substantial further progress against the inflation goal". Amid these plays, US equities closed mixed but the Treasury yields were down the most in over a week whereas the US dollar index (DXY) marked the heaviest daily gains since June 18, up 0.09% around 91.90.
It’s worth noting that traders are waiting for Friday’s US Nonfarm Payrolls (NFP) for clear direction and hence subdued trading may be witnessed before that. Though, China’s official PMIs and Australia’s trade figures can offer intermediate entertainment. Meanwhile, comments from the Fed policymakers and covid updates keep the driver’s seat.
AUD/USD struggles to find traction between 200-day SMA and the 0.7600 threshold. Bearish MACD and weak Momentum back an attempt to refresh yearly low of 0.7477 on the clear downside past 0.7560 SMA support figures.
Event Risk Data Today
Australia: The Australian Chamber–Westpac Survey of Industrial Trends, Australia's longest running business survey dating from 1966, provides a timely update on manufacturing and insights into economy–wide trends. The Q1 survey was conducted from 18 May to 15 June (after 11 May Federal Budget).
Euro Area: June economic confidence is expected to advance to 116.5, with further gains ahead as the economy continues to reopen.
US: April FHFA house prices (market f/c: 1.6%) and the S&P/CS home price index (market f/c: 1.8%) are set to reveal broad-based, robust gains – however, affordability constraints may be crimping turnover. Consumer confidence, which has lagged the broader economic recovery, is expected to rise to 119.0 in June.