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Stock markets rallied after President Biden announced he wouldn’t run in the November presidential election, causing the odds of a Trump victory to slightly increase. The rally in US equities was led by tech stocks, and the yield on the US 10-year note rose 1.6 bps to 4.25%. The US Chicago Fed National Activity Index indicated a decline in economic activity for June, dropping to 0.05 from 0.23 in May.
The People’s Bank of China cut a key short-term policy rate for the first time in nearly a year, lowering the seven-day reverse repo rate by 10 bps to 1.7%. This move aims to bolster the economy after disappointing growth and marks a shift toward a new policy benchmark. Following this, Chinese banks also reduced their main benchmark lending rates by 10 bps.
The actions of the PBoC seem to be part of a broader reform structural economic and political plan unveiled by China President Xi Jinping over the weekend. Another official announcement, on Sunday, upheld plans to put technology at the centre of China’s economic future, while tolerating slower growth in the near term.
Markets expect that the CNY will stay on the defensive due to the rate cuts from the PBoC. Rate cuts may only add to the already-present sense of apprehension around the prospect that China needs a cheaper CNY to support its 5% growth target for 2024.
Overall, the USD is stronger against the Trans-Tasman currencies.
Economic Data
• JP – Jun. Machine Tool Orders YoY
• EU – ECB’s Lane Speaks
• EU – Jul. Consumer Confidence
• US – Jun. Existing Home Sales
• US – Jul. Richmond Fed Manufact Index
Mid market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6643 |
| AUD/NZD | 1.1114 |
| AUD/JPY | 104.34 |
| AUD/CNY | 4.8464 |
| AUD/EUR | 0.6099 |
| AUD/GBP | 0.5136 |
AUD/USD 24 Hour
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