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Equities dropped overnight due to concerns about a US proposal to tighten trade restrictions on advanced semiconductor technology sales to China. Tech stocks like Nvidia, which have been driving the equity rally this year experienced significant declines. The yield on the US 10-year fell by 2bp to 4.15%.
US industrial production increased by 0.6% in June, exceeding the expected 0.3% rise. This was partly due to a significant increase in the volatile autos category. Even without this factor, manufacturing still rose by 0.3%. However, low manufacturing survey results suggest that activity may weaken in the future.
Overnight, Fed officials Waller and Williams mentioned that rate cuts will soon be appropriate due to improved inflation data and signs of the labor market cooling.
The USD weakened against most of its G10 peers. The DXY (dollar index) dropped below the 104.00 support level, marking its lowest point since March.
Attention will instead shift to Australia’s June labor market data during the day. In the evening, the focus will turn to the UK unemployment figures at 6:00 pm. Shortly after midnight, the European Union will announce its main refinancing rate, which is expected to remain unchanged at 4.25%. The accompanying monetary policy statement and subsequent press conference, scheduled 30 minutes later, will be closely watched for indications regarding future policy timing. Additionally, during this period, the market will also anticipate US unemployment claims and the Philly Fed Manufacturing Index.
Mid market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6728 |
| AUD/NZD | 1.1077 |
| AUD/JPY | 104.69 |
| AUD/CNY | 4.8887 |
| AUD/EUR | 0.6150 |
| AUD/GBP | 0.5172 |
AUD/USD 24 Hour
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