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Risk sentiment remained soft overnight which saw the Dow Jones close -1.3%, the S&P 500 -.8%, and the Nasdaq -.7%. U.S. 10-year yields rose 4bps to 4.2%, while crude oil fell .7% to $82.30 a barrel. The USD was stronger across the board, including against the AUD which settled at the lower end of its .66975/.67435 range.
Into the London lunch with markets much calmer than yesterday. USD/JPY traded 10pts off 156.59 highs while EUR/USD and GBP/USD slid lower to 1.0926 and 1.2979 ahead of the ECB’s decision. The antipodes meanwhile kept to their ranges, trading 0.6730 and 0.6070 respectively.
US weekly jobless claims data was worse than expected with initial claims rising to 243k to be worse than expectations of 229k while continuing claims rose to 1.867 mio to be worse than expectations of 1.856 mio. On a more positive note, the Philly Fed Business Outlook Survey for July rose to 13.9, up from 1.3 and beating expectations of 2.9. Little reaction to the date though NZD/USD briefly hit new highs of 0.60855 while GBP/USD slipped to lows of 1.2976.
ECB President Lagarde noted that domestic inflation remained high and labour markets remained resilient though risks to the economic outlook were now tilted to the downside. In terms of forward guidance, she noted that the question of what to do in September was wide open with more information to be obtained prior to the decision.
Day Ahead
very quiet day ahead with little on the calendar. In the political space, speculation continues to swirl around U.S. President Bidens re-election nomination. Some sources are suggesting news of him dropping out of the race could emerge as early as this weekend.
Elsewhere, investors are on the lookout for headlines from China’s plenum and any official USD/JPY intervention/activity. The AUD/USD filled some bids on its way to an overnight low of .66975. Further demand now rests in the .6640/50 region, while offering interest remains above .6800.
Mid market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6705 |
| AUD/NZD | 1.1093 |
| AUD/JPY | 105.44 |
| AUD/CNY | 4.8803 |
| AUD/EUR | 0.6351 |
| AUD/GBP | 0.5179 |
AUD/USD 24 Hour
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