After a strong rally from post-Brexit lows, global equity markets are flat on little news.
Oil prices are down over 4%, reversing the previous day’s gains, as data showed that US fuel supplies unexpectedly grew. Despite that move, CAD has been one of the best performing currencies, as the Bank of Canada issued an upbeat assessment about the outlook.
Both the NZD and AUD are down slightly. Once again, the NZD met resistance just above the 0.73 mark. It has crossed that mark a number of times over the past week and has failed to push on. It trades this morning at 0.7275. With no top tier local data this week, the currency remains at the whim of risk sentiment and global forces.
NZD/AUD remains stuck in a very tight trading range. Over the past 30 days it has spent around 95% of the time in a range between 0.95-0.96 and trades close to the mid-point of that range this morning. CPI data due on the 18th and 27th of July for NZ and Australia respectively are key releases which have the potential to break that trading range.
Today, our colleagues at NAB think Australian employment growth will come in lower than the market expects, largely due to technical survey factors. This could have a temporary influence on the AUD this afternoon.
GBP is at the bottom of the leaderboard, down 0.7% to 1.316. It traded as high as 1.333 yesterday afternoon, showing signs of a short squeeze, but the weaker fundamentals have reasserted themselves. Theresa May was sworn in as the new PM this morning.
EUR is up 0.4%, back over the 1.11 mark again.
Following a rapid increase, USD/JPY found some resistance at the 105 mark and is down 0.3% to 104.40. There has been much market speculation about the next policy move from Japan, namely the size of the forthcoming fiscal stimulus package and the response of the BoJ. Ben Bernanke’s trip to Japan got the market speculating about ‘helicopter money’, but some top officials and advisors have been reported as saying that such a radical move is not on the agenda.
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