To the scoreboard:
Dow: 21,640.75 +66.02 (+0.31%)
S&P 500: 2,473.83 +13.22 (+0.54%)
AUD/USD: 0.7955 +0.0002 (0.03%)
ASX200 SPI futures (Sept contracts): 5,695 (+30)
Iron ore benchmark 62% fines: $US70.24 (+2%)
1. Currencies fluctuate: The US dollar index rose by 0.2% overnight but remains below 95 cents, with markets effectively ruling out the prospect of fiscal stimulus measures in the US being enacted this year. USD gains were largely due to a fall in the euro, which came off its recent highs but remains above $US1.15. Currency and bond markets were relatively quiet ahead of key interest rate announcements later today. The Aussie dollar had another strong session, helped by higher commodity prices, broader USD weakness and the fallback in the euro.
2. Bonds calm: Bond markets were flat ahead of key interest rate announcements from global central banks later today. Benchmark US 10-year bonds traded flat at 2.27%. This afternoon, the Bank of Japan will make its interest rate announcement, with no change expected to the BoJ’s current stance of ultra-easy monetary policy. That will be followed tonight by the European Central Bank, with markets tentative following recent strong gains in the euro as the ECB indicated that it may look to start withdrawing stimulus in September.
3. But stocks are on the charge: It was more of a risk-on affair overnight in global stock markets. The three major stocks indexes in the US all hit new record highs as earnings strength remains robust. Energy and materials companies leading the way as all eleven sectors in the S&P500 closed higher. Stocks in Europe also rose, with London’s FTSE up 0.55% and the European STOXX600 index up 0.77%. It points to a higher open in Asian markets, after a solid session on the ASX200 yesterday led by the rally in banks.
4. Big data day ahead: To be led by the monthly employment figures for June from the ABS, following a strong report in May. David Scutt’s 10-second guide is here. There’s also NAB’s business confidence survey for the June quarter. In addition to the BoJ’s interest rate announcement, Japan also has balance of trade figures this morning. Later tonight the UK has retail sales and in the US weekly jobless claims figures will be released.
5. Commodity rally continues: Spot prices for benchmark 62% fines extended their current rally to 31.6%, breaking through the $US70 a tonne barrier for the first time since early April. Chinese demand for steel remains strong, and short sellers are getting out of the game. Benchmark crude oil also nudged higher towards $US50 a barrel, as the weekly inventory report out of the US showed another big draw of 4.7 million barrels. Gold’s 3-day rally came to an end on slightly higher USD strength, but was still holding this morning above $US1,240 an ounce.
6. Bitcoin $US3,000?: That’s what the charts show, according to Goldman Sachs’ chief technical strategist Sheba Jafari, who said that current market dynamics were more in Bitcoin’s favour, and future price action could see it move as high as $3,700. Bitcoin is trading this morning at around $US2,260 after dipping below $US2,000 earlier this month. Ethereum prices are fluctuating at around $US200, have fallen from more than $US240 overnight.