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Global Market Update
The View from Australia

Craig Killaby July 22, 2019

Data/Speakers

 

> EU July German Buba Monthly Report

> CA May Wholesale Sales : -1.8% v. 0.8% exp.

 

Overnight Headlines (BBG)

 

>  Congress and the White House are on the brink of an agreement that would suspend the debt limit until July 31, 2021, and increase government spending for two years, according to people briefed on the discussions

 

What you need to know

 

There really isn’t a lot to go over this morning as the AUD remains trapped in its new found range between the 100/200DMAs, with a very quiet session across FX markets. The Aussie struggled with no real data catalysts, drifting lower as markets eagerly await the latter portion of the week and next week’s very important data. The session saw the USD strengthen in DXY terms, gaining against most of the majors with the Loonie the worst performer after a significant data miss overnight down near 0.6%.

 

In Europe, the UK looks ready to appoint Boris Johnson as the next leader of the Conservative party as the voting finished overnight. The new leadership and PM is expected to be announced very soon. In the US, Trump’s new appointee for the Fed would be backing a 0.5% cut next week, unsurprising considering Trump’s eagerness for the Fed to ease policy and boost equity markets ahead of the 2020 campaign. US equity markets had a good session ahead of earnings optimism from the technology sector, with the S&P500 up 0.3%. Mixed bag on the commodities front, with Oil up 0.3% while Iron ore, Copper and Gold all down a touch.

 

The Day Ahead

 

Data

 

> JP BOJ Gov. Kuroda to speak

> AU RBA Ast. Gov. Kent to speak

> US June Existing Home Sales : 5.35M exp.

> US July Richmond Manufacturing Index : 5 exp.

 

RBA Ast. Governor Kent has already spoken this morning and market reaction was nil, with the content of the speech not touching on monetary policy. Markets will have to wait until Thursday when Gov. Lowe is due to speak to get any insight into the RBA’s likely policy path. Expecting another dull day across markets, and if yesterday is any sort of indication we can expect the AUD to drift lower with the lack of data catalysts changing sentiment. If the AUD breaks through last nights low of 0.7031 (very close as I write) then downside expected until the 0.7000 handle.

 

Range for the day : 0.6995 – 0.7050

 

AUD/USD Technicals

 

Much of the same from a technical perspective, with the range now firmly established above 0.700 and sandwiched by the 200DMA (0.7090) and the 100DMA (0.7020). being held up at the low of 0.7031, with a break leaving the pair vulnerable to a drop towards 0.7000 and 0.6958 (55DMA).

 

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