AUDUSD Day’s range: 0.73369 – 0.73821
AUDUSD recovered slowly throughout the session despite the concern around the growth in China and the spread of Delta Covid-19. AUD slipped slightly after the July Caixin Manufacturing PMI comes lower than expected (50.3 v. 51.1 exp.) as investors are worried about the global growth. AUDUSD slowly appreciated with US Treasury Yield dropped as much as 8.9 basis points for the day.
This week is another week full with employment reports realizing from the U.S. Canada and New Zealand, and central bank meetings in Australia and the U.K. The U.S. ISM manufacturing PMI was lower than expected (59.5 v. 60.8 exp.), but the overall trend in unemployment data was strong. FOMC member Waller notes that if employment reports are strong in August and September, then he would suggest tapering their asset purchase in the September meeting.
The monetary announcement from RBA is the most important event tonight. The initial announcement to reduce bond purchases was made on the 5th of July. At the time when Melbourne’s lockdown ended and Sydney went into a two weeks lockdown. Other cities such as Darwin and Perth also tightened restrictions but were expected to be short. The situation changed within few weeks with Delta Covid-19 cases rises rapidly and Brisbane and Sydney’s lockdown was extended.
It is likely that the RBA will delay asset tapering but investors are more concerned with the timing. If RBA decided to maintain the support to the economy with no precise delay date, then AUDUSD may drop to fresh 8-month lows. If RBA delays taper by a month or two, then AUDUSD may still drop to an 8-month low. However, if RBA keeps its plan to start tapering bond purchases in September then AUDUSD will rally.
Data:
- AU July AIG Manufacturing Index : 60.8 v. 63.2 prev.
- AU July MI Inflation Gauge : 0.5% v. 0.4% exp.
- CN July Caixin Manufacturing PMI : 50.3 v. 51.1 exp.
- EU July German Final Manufacturing PMI : 65.9 v. 65.6 exp.
- US July ISM Manufacturing PMI : 59.5 v. 60.8 exp.
Major moves in the market:
Stocks
- S&P 500 contracts rose 0.1% as of 7:01 a.m. in Tokyo. The S&P 500 index fell 0.2%
- Nasdaq 100 futures added 0.1%. The Nasdaq 100 was little changed
- Nikkei 225 futures fell 0.5%
- Australia’s S&P/ASX 200 Index futures lost 0.3%
- Hang Seng Index futures were little changed
Currencies
- The Bloomberg Dollar Spot Index dipped 0.1% Monday
- The euro was little changed at $1.1873
- The Japanese yen traded at 109.32 per dollar
- The offshore yuan was at 6.4638 per dollar
Bonds
- The yield on 10-year Treasuries declined about five basis points to 1.18%
Commodities
- West Texas Intermediate crude rose 0.4% to $71.54 a barrel after dropping 3.6%
- Gold was at $1,813.31 an ounce
Upcoming data
- AU June Building Approvals : -3.8% exp.
- AU RBA Rate Statement/Decision : 0.10% exp. (no change)
- CA July Manufacturing PMI : 56.5 prev.
- US June Factory Orders : 1.0% exp.
- US FOMC Member Bowman to speak
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