The USD is the strongest and the AUD is the weakest as the NA session begins.
The Reserve Bank of Australia kept rates unchanged for the 2nd consecutive meeting at 4.10%. There was a 65-35% spilt vs doing nothing and hiking, and the RBA sided with the odds as it continues to assess the impact of previous rate hikes and the broader economic landscape. The RBA said that despite it declining, Australian inflation remains too high, while household consumption growth is weak. They added that Labor market conditions have slightly relaxed but remain very tight.
Returning inflation to the 2-3% target range remains a priority for the RBA, and current data suggests this is achievable over the forecast horizon. However, household consumption outlook continues to be a source of uncertainty. The bank signaled that further monetary policy tightening may be necessary to hit inflation targets, though this will depend on incoming data and the "evolving assessment of risk". This has traders thinking the RBA will continue to wait to let the "evolving risk" from prior tightenings word itself through the economy.
The AUDUSD has continued to weaken through the London morning session after smashing below its 100-day moving average of 0.66920 after the decision. The price has moved down to test the low price from Friday's trade at 0.6622 (and other swing lows near that level - see red circles on the chart below). The low price has so far reached 0.66248. Yesterday, the price squeezed higher but stalled as expected near the cluster of resistance targets and backed off. Sellers kept a lid on the pair and were rewarded today (see "AUDUSD trade hired today ahead of RBA decision, but approaches key technical resistance".
In the Euro area this morning PMI data was mixed but employment in Germany and the Euro area was stronger than expected:
Spanish Manufacturing PMI came in at 47.8, slightly BELOW the forecast of 48.2 and lower than the prior value of 48.0.
Italian Manufacturing PMI showed a SLIGHT IMPROVEMENT at 44.5, beating the forecast of 44.4 and prior value of 43.8.
French Final Manufacturing PMI was BETTER than expected and prior, at 45.1 compared to a forecast and prior value of 44.5.
German Final Manufacturing PMI MET the forecast and prior value, coming in at 38.8.
Final Manufacturing PMI for the Eurozone was as forecasted and matched the prior value at 42.7.
British Final Manufacturing PMI was slightly BETTER than expected at 45.3, beating the forecast and prior value of 45.0
Employment data showed:
German Unemployment Change showed a decrease of 4K, much better than the expected increase of 19K and the previous increase of 28K.
Italian Monthly Unemployment Rate dropped to 7.4%, lower than both the forecasted 7.7% and prior 7.6%.
Eurozone Unemployment Rate came in lower than expected at 6.4%, compared to a forecast and prior value of 6.5%.
Later today, both Canada Manufacturing PMI (at 9:30 AM ET) and US final Manufacturing PMI along with ISM Manufacturing PMI data will be released. The S&P Global manufacturing PMI will be released at 9:45 AM with an estimate of 49.0 unchanged from the flash reading. The ISM manufacturing PMI is expected at 46.9 versus 46.0 last month (to be released at 10 AM ET).
In the US the JOLTS job openings (expected 9.61M versus 9.82M last month) and construction spending (0.6% versus 0.9% last month) are expected to be released at 10 AM ET. A look ahead to tomorrow, New Zealand employment statistics for the quarter will be released at 6:45 PM ET, with the unemployment rate expected to tick up to 3.5% from 3.4%, and the employment change to rise by 0.6% versus 0.8% last quarter.
The US stocks are lower in pre-market trading to start the new trading month. Both the S&P and the Nasdaq indices closes higher for the 5th consecutive month last month. The NASDAQ led the way with a gain of 4.05%.
Earnings this morning showed a mix from the major releases in various industries. A look at the major releases shows:
Norwegian Cruise Line Holdings Ltd (NCLH) - BEAT
- Q2 2023 Adj. EPS: 0.30 vs expected 0.27
- Revenue: $2.21 billion vs expected $2.17 billion
Marriott International Inc (MAR) - BEAT
- Q2 2023 Adj. EPS: 2.26 vs expected 2.18
- Revenue: $6.08 billion vs expected $5.99 billion
Altria Group Inc (MO) - BEAT
- Q2 2023 Adj EPS: 1.31 vs expected 1.30
- Revenue: $6.508 billion vs expected $5.43 billion
Molson Coors Beverage Co (TAP) - MIXED
- Q2 2023 EPS: 1.78 vs expected 1.63
- Revenue: $3.27 billion vs expected $3.29 billion
Sirius XM Holdings Inc (SIRI) - BEAT
- Q2 2023 EPS: 0.08 vs expected 0.07
- Revenue: $2.25 billion vs expected $2.24 billion
Uber Technologies Inc (UBER) - MIXED
- Q2 2023 Adj EPS: 0.18 vs expected -0.01
- Revenue: $9.23 billion vs expected $9.33 billion
Pfizer Inc (PFE) - MIXED
- Q2 2023 Adj. EPS: 0.67 vs expected 0.57
- Revenue: $12.73 billion vs expected $13.27 billion
Marathon Petroleum Corp (MPC) - BEAT
- Q2 2023 EPS: 5.32 vs expected 4.59
- Adj. EBTIDA: $4.50 billion vs expected $4.0 billion
Merck & Co Inc (MRK) - MIXED
- Q2 2023 EPS: -2.35 vs expected -2.18
- Revenue: $15.04 billion vs expected $14.45 billion
Caterpillar Inc (CAT) - BEAT
- Q2 2023 Adj. EPS: 5.55 vs expected 4.58
- Revenue: $17.3 billion vs expected $16.49 billion
After the close AMD, Starbucks, and Pinterest will report.
Crude oil is trading marginally lower after closing the month of July with a gain of over 15%. Yields in the US and Europe are higher.
A snapshot of the markets as the NA session gets underway shows:
- Crude oil is trading down $0.30 or -0.35% $81.51
- Spot gold is trading down $13.17 or 0.70% at $1951.90
- Silver is trading down $0.32 or -1.33% at $24.41
- Bitcoin is trading $28,842. That is down from the level near 5 PM yesterday at $29,150
In the premarket for US stocks, the major indices are trading lower to start the trading month.
- Dow Industrial Average is trading down 44.53 points after rising by 100.24 points yesterday
- S&P index is trading down 13.5 points after rising 6.73 points yesterday
- NASDAQ index is trading down 75 points after yesterday 29.37 point rise
In the European equity markets, the major indices are trading lower after modest gains in July
- German DAX, down -0.94%
- France's CAC, down -0.86%
- UK's FTSE 100, down -0.26%
- Spain's Ibex, down -0.90%
- Italy's FTSE MIB, down -0.97% (delayed)
In the Asian Pacific today, equity markets closed mixed:
- Japan’s Nikkei 225, up 0.92%
- China’s Shanghai Composite, unchanged
- Hong Kong’s Hang Seng, down -0.34%
- Australia’s S&P/ASX 200, up 0.54%
In the US debt market, yields are higher across the yield curve
- 2-year yield, 4.887%, +1.3 basis points
- 5-year yield, 4.205%, +2.7 basis points
- 10-year yield, 3.990%, +3.4 basis points
- 30-year yield, 4.039%, +2.3 basis points
In the European debt market, benchmark 10-year yields are trading higher across the country spectrum:
