To the scoreboard:
Dow: 21,891.12 +60.81 (+0.28%)
S&P 500: 2,470.30 -1.80 (-0.07%)
AUD/USD: 0.7987 +0.0001 (+0.01%)
ASX200 SPI futures (Sept contracts): 5,660 (-1)
Iron ore benchmark 62% fines: $US73.70 (7.23%)
1. The US dollar index is now at a 13-month low: And it was another strong session for the euro which is now above $US1.18. European CPI came in at 1.3% – not high but it matched expectations while June retail sales growth in Germany was particularly strong. Data in the US was solid, but the bearish sentiment remains. So for traders the European data suggests that the ECB remains on track to signal a shift in monetary policy later this year. Month-end capital flows also likely contributed to USD weakness given that it’s now out of favour (the end of Anthony Scaramucci’s 10-day stint in Washington had little impact on currency markets).
2. Aussie higher ahead of big day of data: The Australian dollar has moved above US80 cents in morning trade ahead of the RBA’s interest rate announcement today (2:30pm AEST). David Scutt’s 10-second guide is here. Also on the data front this morning there’s ANZ’s consumer confidence report at 9:30am AEST, PMI data from both the Ai Group and Commonwealth Bank and the CoreLogic home price index. Following yesterday’s official state PMI figures, China will release its Caixin PMI data then later tonight there’s European Q2 GDP figures and the US PCE inflation index.
3. Iron ore just went nuts: It looked like a big move was on the cards in yesterday’s trade, and spot prices last night didn’t disappoint with a massive 7.23% surge which took benchmark iron ore prices to their highest level since April. Gains were driven by yesterday’s official Chinese PMI report, which revealed strong activity in the Chinese steel sector. With demand outpacing supply, iron ore futures are ripping higher once again this morning.
4. Stocks quiet: US stocks traded flat, although the NASDAQ continued to face resistance and fell another 0.42%. ASX futures traders have priced almost no change into the local index at this morning’s open. It follows a strong day of gains yesterday which kept Australian stocks within the recent trading range after some heavy selling on Friday. Earnings season is around the corner, with major company results kicking off tomorrow when Rio reports. Today’s session is likely to be relatively quiet ahead of the RBA’s interest rate announcement this afternoon.
5. D-day for Bitcoin is here: A split or “fork” (here’s what that means) in the currency now appears likely (it’s expected to happen at around 10:30pm AEST). While the development community had tentatively agreed on a revised operating platform called SegWit2, a group of Bitcoin miners who want to speed up transaction speeds have opted for a separate version called Bitcoin Cash. Judging by Bitcoin prices, it looks like a positive for Bitcoin holders – a short time ago the price was on the charge back towards $US3,000.
6. US dollar weakness has different consequences: The US dollar is down 8.7% this year, and that’s either good or bad news for stocks depending which market you look at. This post from the Wall Street Journal details how stronger currencies are likely to weigh on share prices in developed markets like Europe and Japan. On the flip side, foreign capital poured into emerging market equities in Asia in the first half of this year as investors took advantage of low interest rates and global liquidity.
Bonus item: Snap Inc (the parent of Snapchat) is struggling to impress investors and its stock price is falling – this post from Business Insider’s Alex Heath takes a closer inside look at the company’s early struggles.
Enjoy your Tuesday, I’m on Twitter @Mr_SamJacobs.