Global Markets: 

  • Asian stock markets: Nikkei down 0.50 %, Shanghai Comp fell 0.30 %, Hang Seng and ASX both declined 0.25 %
  • Commodities: Gold at $1290 (+0.15 %), Silver at $20.22 (-0.05 %), Crude Oil at $98.40 (+0.10 %)
  • Rates: US 10 year yield at 2.482

News & Data: 

  • RBA Interest Rate Decision: 2.50 %, Expected: 2.50 %, Previous: 2.50 %
  • Australia (AUD) Trade Balance (JUN): -1,683M, Expected: -1,900M, Previous: -1,911M
  • Japan (JPY) Markit Japan Services PMI (JUL): 50.4, Previous: 49China (CNY)
  • HSBC China Services PMI (JUL): 50.0, Previous: 53.1
  • RBA: Moderate growth has been occuring in consumer demand; strong expansion in housing construction under way
  • RBA: Resources sector investment spending is starting to decline significantly
  • RBA: Overall, we expect growth to be little below trend over the year ahead
  • RBA: Recent data showed increase in inflation, but growth in wages has declined noticeably, which should keep inflation consistent with the target
  • RBA: MonPolicy appropriately configured; most prudent course a period of stability in interest rates 

FX Update: 

  • AUD – The RBA statement was neutral as expected. The central bank mentioned that while recent data showed an uptick in inflation, the slow growth in wages should keep it consistent with the banks target. It included the standard statement about the Aussie Dollar, that it remains at historically high levels, but the RBA has lately been less aggressive in talking the currency down. AUD/USD initially didn’t move much, but rallied to 0.9345 a bit later, as specs who were anticipating a more dovish RBA had to cover their positions. Dealers mention offers resting 0.9345-55 and stops starting above 0.9360. To the downside, bids from local exporters at 0.9290.
  • CAD – USD/CAD is likely to consolidate this week amid lack of tier 1 data releases out of the US and Canada. Mix of corporate and leveraged demand towards 1.0880. Key support now lies at 1.0850 and the pair should be well-bid on any larger dip. To the topside, solid take-profit selling interest ahead of the 1.0960 resistance level.
  • EUR – Bids from sovereign names reported from 1.3405 down to the big figure. 1.3370 remains the key level to the downside and system funds have sell stops resting beneath should it break. To the topside, Asian names have offers resting between 1.3440 and 1.3450. It feels that after the lacklustre NFP release and likely USD consolidation this week the risk is to the topside and we could see a test of 1.3475 fairly soon.
  • JPY – USD/JPY slightly fell overnight, but it seems the pair will be stuck again within a 60-80 pips range over the next few days. Solid bids from leveraged names towards 102.30, while supply noted around 102.80. A clear break sub-102.20 is required to confirm the short-term top at 103.10, which would pave the way for a 101.70 test. 

Upcoming Events: 

  • 07:45 GMT – Italy Services PMI (53.8)
  • 07:50 GMT – France Services PMI (50.4)
  • 07:55 GMT – Germany Services PMI (56.6)
  • 08:00 GMT – Euro Zone Services PMI (54.4)
  • 08:30 GMT – UK Services PMI (58.0)
  • 09:00 GMT – Euro Zone Retail Sales (0.5 % MoM, 1.4 % YoY)
  • 13:45 GMT – US Markit Services PMI (60.8)
  • 14:00 GMT – US ISM Non-Manufacturing (56.5)
  • 22:45 GMT – New Zealand Employment Change (4.0 % YoY)
  • 22:45 GMT – New Zealand Unemployment Rate (5.8 %)