Good morning and happy Friday.
To the scoreboard:
Dow: 22,026.10 +9.86 (+0.04%)
S&P 500: 2,472.16 -5.41 (-0.22%)
AUD/USD: 0.7951 +0.0002 (+0.03%)
ASX200 SPI futures (Sept contracts): 5,664 (-1)
Iron ore benchmark 62% fines: $US72.93 (+0.87%)
1. To forex markets: And the pound dipped following a dovish statement from the Bank of England last night, which kept rates on hold at 0.25% as expected. The bank voted 6-2 to keep rates on hold (from 5-3 at the last meeting) and also downgraded its 2017 GDP growth forecast. The AUD fought back from a low of 0.7911 against the US dollar, ahead of what could be a wild session for the Aussie with two key data points scheduled for release. Here’s the pound’s fall:
2. The day ahead: In Australia today there’s retail sales data for June and the Reserve Banks quarterly Statement on Monetary Policy (SoMP), both released at 11:30am. Retail sales are coming off a strong month in May, and are forecast to climb in June by 0.2% (this morning’s report will also include quarterly data). The SoMP will include the RBA’s economic outlook through to December 2019, with traders looking for any changes to the banks forecast as well any extra attention the bank may pay to the recent strength in the Australian dollar.
3. USD still feeling the pressure: Later tonight the US and Canada both release all-important employment figures for June. While US non-farm payrolls are expected to climb by 180,000 in July, the focus will be on wages with annual wage growth forecast at 2.5%. There was more soft data in the US with ISM manufacturing PMIs expanding slower than forecast. The euro is still threatening $US1.19 while the yen has strengthened with USD/YEN back below 110 for the first time since June.
4. US stocks dip on political concerns: To stocks and the UK’s FTSE index got a boost from the weaker pound, climbing by 0.9% while European markets were little-changed. The Dow is still above 22,000, but US stocks slipped as FBI Special Counsel Robert Mueller expanded his investigation into Russian interference at the US election. Futures traders are forecasting are quiet open for the ASX200 after yesterday’s falls.
5. Bonds rally: Global bonds rallied overnight (yields lower) following the Bank of England’s more dovish outlook, with benchmark 10-year US treasuries falling 5 basis points to 2.21%. Australian 10-year bonds also dipped sharply, falling to 2.6% from above 2.7%. TGerman bonds yields also fell, and the recent split in the correlation between the EUR/USD exchange rate and the yield spread between US and German bonds remains in place.
6. Bitcoin Cash is in the wars: Following Tuesday’s split of the currency, the creation of Bitcoin Cash had investors watching which of the two versions would perform better in the early going. Well, the original version (BTC) is holding steady above $US2,700 while Bitcoin Cash (BTH) had a rough session last night, falling by more than 20%. There’s an argument now building amongst analysts that Bitcoin Cash may be about to crash, with Tuesday August 8 pinpointed as D-Day for the alternative version’s viability.
Enjoy your weekend. I’m on Twitter @Mr_SamJacobs.