Market Highlights
- AUD drops after policy minutes highlight a softer tone from the RBA
- US indexes continue to break the previous days lows
- DXY holds 102 support
As in yesterday's report, the main focus out of the US this week will be the Jobless Claims data on Thursday.
Yesterday was a very subdued trading session as the US was on bank holiday.
DXY is printing lower lows and highs, in order to see the short term trend continue the 102 support would need to break - this in turn would see US10Y decline.
Equities continue to slide on the back of the PBoC rate cuts, albeit the 10bps as forecasted. The negative move here would suggest that maybe the markets were looking for more than a 10bps rate cut.
FX Market Analysis
Although a quiet session so far, we have seen a move into the safe haven JPY (the weakest currency over the past few weeks).
AUD has slipped on the back of the RBA policy minutes, giving a less a hawkish outlook than the market has expected.
As for the BoJ remarks from the Japan finance minister: "Suzuki says FX stability is important" - which came as a shock considering the BoJ policy decision that has been announced last week.
Markets are wondering whether an intervention might be close...
Fed Chair Powell speaking at the Semi Annual Testimony could see some more volatility on the stocks, especially after his remarks last Wednesday not really convincing of the hawkish projections.
Classical AUDJPY could provide the risk off trade, although with JPY being sold across the board, there are a few JPY crosses that look appealing for short term sells.
Tomorrow, we will be seeing the UK CPI data coming out, expecting some volatility on GBP crosses.
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