From Greg McKenna at GlobalFX, here’s your quick guide to the chatter on the Australian market this morning, when it’s all about the RBA. Greg thinks the AUD may even be in for a bounce, depending on the statement…
– Stocks were lower overnight on balance in the US and Europe in what was fairly quiet trade. The Monday after non-farms is often a bit of a holiday and at the close the Dow (-0.30% @15,612), the S&P (-0.16% @1,707), the FTSE (-0.42%), DAX (-0.11%) Milan and Madrid all lower. The NAsdaq and the CAC managed to eke out small gains but the highlight of the night has been the announcement this morning that Amazon founder Jeff Bezos is buying the Washington Post. That is truly interesting.
– Also interesting were moves in Global FX markets with the US dollar under a little bit more pressure with the Euro (1.3254) trading up to 1.33 at one stage, Sterling (1.5352) stronger after the very good print on the Services PMI above 60 (truly amazing). The Yen is on its highs (USDJPY, 98.19) and is the best performer of the big pairs overnight while the Aussie (0.8927) has recovered strongly from yesterday’s forays down to an 0.8846 low which might be THE low.
– Data yesterday for global services was not too bad really with many countries from China to Portugal and especially the UK beating both last month and expectations in the Markit non-manufacturing PMI’s released in the past 24 hours.
– Rates across the globe were up a little after the solid services PMI’s 10 year US Treasuries at 2.64%, Bunds at 1.69% and Gilts at 2.48%. Interesting the tiny reaction in bonds versus currencies again – seems currencies are very short term.
Commodities were lower across the board which is a bit weird given the US dollar move but the data is about services not physical inputs so it kind of makes sense. Nymex crude fell 0.47%, gold was down 0.57%, copper down a penny of 0.11% and our friends the Ag complex were at it again with corn down 1.47%, wheat off 2.35% but soybeans were more quite losing only 0.09%.
Does anything really matter in Australia except the RBA today? Are they going to cut? Probably. But it is their words that are the key and I reckon they will be optimistic – which interest rate markets might not like but FX traders just might love (although the shorts are going to hate it). More on this at Global FX.
Greg’s on Twitter.