6 things Australian traders will be talking about this morning

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Good morning.

To the scoreboard:

Dow: 22,016.24 +52.332 (+0.24%)
S&P 500: 2,477.57 +1.22 (+0.05%)
AUD/USD: 0.7964 -0.0003 (-0.04%)
ASX200 SPI futures (Sept contracts): 5,692 (+11)
Iron ore benchmark 62% fines: $US72.30 (-1.7%)

1. Traders pick and choose with the USD: The US dollar index dipped again as traders remained buoyant about the prospects for the pound and euro. The euro almost reached $US1.19 overnight before closing at $US1.1850, despite monthly Eurozone PPI growth of just 0.1%. However the USD weakness wasn’t across the board, as the greenback gained ground against the yen and commodity bloc currencies including the Australian dollar.

2. Stocks are flying high: The Dow broke through 22,000 for the first time overnight, continuing the recent trend of weakness in the US dollar, compressed bond yields and US stocks hitting new record highs. 72% of US reporting companies have beat estimates this earnings season, and Apple was no different with a big earnings beat which saw its stock surge ahead overnight.

3. Positive session ahead?: Meanwhile, ASX200 futures traders are more bullish today after the local index gave up some of Tuesday’s gains in yesterday’s session. Australian earnings season is underway as Rio reported a half year profit of almost $4 billion and gave most of it back to shareholders. It’s been back and forth for a while now on the ASX, and this chat from AxiTrader’s Greg McKenna clearly shows how the index has been trading within a wedge with no clear breakout in either direction:

4. Bonds remain calm: Benchmark 10-year bonds remaining below 2.3% after yesterday’s falls. ADP payroll figures showed an increase of 178,000 in June, just shy of 185,000 forecast but the miss still weighed on the US dollar. Despite the trend of softer data and political gridlock in Washington, US Fed committee members Mester & Williams (heads of the Cleveland and San Francisco divisions) reiterated last night that the Fed is still on track to start reducing its balance sheet later this year.

5. The day ahead: Domestically, there’s balance of international trade figures from the ABS at 11:30am AEST. The surplus is forecast to fall to $0.6 billion from $2.5 billion on lower export revenue. That could impact the Aussie dollar if the surplus differs from estimates. There’s also PMI data out this morning from Commonwealth Bank and Ai Group. Later tonight, the Bank of England has its interest rate announcement, with rates expected to stay on hold at 0.25%. Here’s a summary of what to expect from tonight’s meeting.

6. Iron ore gives back ground: Benchmark 62% fines continued to ease back highs earlier this week after a huge 7% surge sent prices to their highest level since April. The US government’s weekly oil inventory report showed a smaller draw than expected, but benchmark crude still rose 1% to above $US52 a barrel as the figures showed a bigger draw in refined gasoline.

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