4. King Dollar fighting for its crown: Of market-specific concern, the US Dollar spiked last night. A single cause is tough to ascertain as to why today the Greenback decided to rip higher. A combination of causes are being given. Continued funkiness in US money market, which is driving a search for US Dollars, is one. A tumble in the Euro and Pound is another one. The release of the transcript of US President Trump’s conversation with UK President Volodymyr Zelensky, which showed little categorical evidence of misconduct, is possibly the favoured interpretation. The US Dollar Index is 0.3 per cent shy of multi-year highs now, as the greenback keeps powering along its broad-uptrend.
5. Pound falls as Brexit optimism turns to uncertainty: As it applies to the Pound, the optimism surrounding the UK Supreme Court’s decision to rule UK Prime Minister Boris Johnson’s proroguing of Parliament as “unlawful” was replaced with confusion, after a sitting in UK Parliament overnight offered a stark reminder that a Brexit resolution is no clearer or nearer. A no-confidence motion in the Johnson’s government appears, just for now, the likeliest next-chapter in the Brexit-drama. However, UK opposition Leader Jeremy Corbyn suggested he’d only back such a thing if October’s Brexit deadline is extended again. The Pound tumbled on the fresh uncertainty.
6. Oil back trading on demand concerns: There’s continued intrigue in the oil market, especially as it applies to determining what it ought to be driving the price right now. Oil prices dipped during overnight trade, after US crude oil inventories showed a smaller than expected drawdown last week, and Saudi Aramco reassured markets that it’s progressing ahead of schedule in getting production back to normal. Following a fortnight preoccupied with fears about undersupply and war in the Middle East, oil seems to be going back to trading on demand side concerns. The global economy is undoubtedly slowing down still, and that’s dragging on the outlook for oil demand.
7. RBNZ saves the surprises, keeps rates on hold: New Zealand met yesterday and kept interest rates on hold at 1.00 per cent. After the last central bank’s surprise 50 basis point cut at its last meeting, the RBNZ decided to adopt a far more predictable tact this time around.
It was a familiar “let’s-wait-and-see-what-the-other-cuts-do” tone taken by the RBNZ in explaining its decision, expressing that it’s open to cutting rates again if it’s needed “to support the economy and maintain our inflation and employment objectives”. The market is expecting the next cut to come from the RBNZ and its next meeting, giving that outcome an 80 per cent chance.
8. Market watch:
ASX futures up 14 points or 0.2% to 6702 near 7.15am AEST
- AUD -0.7% to 67.56 US cents
- On Wall St: Dow +0.6% S&P 500 +0.6% Nasdaq +1.1%
- In New York: BHP +0.9% Rio +0.9% Atlassian -1.1% Nike +4.2%
- In Europe: Stoxx 50 -0.5% FTSE flat CAC -0.8% DAX -0.6%
- Nikkei 225 futures +0.5% Hang Seng futures +0.6%
- Spot gold -1.8% to $US1504.97 an ounce near 2.30pm New York time
- Brent crude -1.6% to $US62.08 a barrel
- US oil -1.9% to $US56.20 a barrel
- Iron ore -0.1% to $US90.34 a tonne
- Dalian iron ore +2.6% to 639.5 yuan
- LME aluminium -0.6% to $US1752 a tonne
- LME copper +0.1% to $US5786 a tonne
- 2-year yield: US 1.68% Australia 0.73%
- 5-year yield: US 1.61% Australia 0.71%
- 10-year yield: US 1.73% Australia 0.94% Germany -0.58%
- 10-year US/Australia yield gap near 6.30am AEST: 79 basis points
This column was produced in commercial partnership between The Sydney Morning Herald, The Age and IG
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