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Currency Market Analysis

Jul 02, 2019 | Currency Market Analysis

Global Themes

USD jumps back higher as trade benefit short-lived

The US dollar quickly rebounded from two-month lows overnight as the impact of the weekend’s trade talks eased.

Importantly, markets see a big difference between a hoped-for “trade deal” that would see an end to the US-Chinese dispute, and the weekend’s “trade truce” that means hostilities can reignite at any time.

The USDSGD jumped 0.3% as it climbed from two-month lows.

RBA ahead

The Australian dollar quickly gave up yesterday’s trade-inspired gains overnight as markets instead looked ahead to a likely Reserve Bank of Australia rate cut.

A rate cut looks more likely than not today, with the most recent Bloomberg survey finding 21 out of 32 forecasts calling for a cut, and the bond market pricing suggesting an 82% chance (source: Reuters).

The RBA makes its announcement at 12.30pm.

Fed speak

The RBA will remain in focus even after today’s decision with a major speech from governor Philip Lowe due tonight at 5.30pm.

The RBA has recently used post-decision speeches to clarify and further articulate its position.

Later tonight, New York Federal Reserve president John Williams speaks.

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