CURRENCY MARKET WRAP
As of Wed Jul 3rd, Singapore Time zone UTC+8
Dollar Index -0.09%, 96.72
USDJPY, -0.50%, $107.83
EURUSD, +0.04%, $1.1291
GBPUSD, -0.37%, $1.2597
USDCAD, -0.29%, $1.3097
AUDUSD, +0.40%, $0.6994
NZDUSD, +0.09%, $0.6678
Longer-dated Treasuries settled near their session highs while the 3-month bill underperformed with no apparent catalyst. The 10-yr yield fell six basis points to 1.98% while the 3-month yield rose three basis points to 2.19%. The U.S. Dollar Index fell -0.12%, 96.72.
Gold rallied to recover its previous losses, settling higher by 3.30% at $1,434.30. The rally in gold accelerated after Russian President Putin unexpectedly pulled out of a scheduled event to meet with his defense minister minutes after U.S. Vice President Pence abruptly returned to D.C. Nothing has been revealed but there are reports that this could be related to a nuclear sub accident. The Vice President Pence’s spokeswoman later said that there is no cause for alarm while an unnamed White House official told Bloomberg that the reason for the return will be revealed “weeks from now.”
On the international front, EU officials have agreed on nominees to top EU jobs. All nominations were in-line with the morning’s report from Die Welt. Germany’s Defense Minister Ursula von der Leyen was nominated to replace EU Commission President Jean-Claude Juncker while IMF Managing Director Christine Lagarde was nominated to take over for Mario Draghi at the ECB. Belgian Prime Minister Charles Michel was proposed as the replacement for EU Council President Tusk while Josep Borrell Fontelles was nominated to replace Federica Mogherini as the High Representative for Foreign Affairs and Security Policy. The nominees still need to be approved by the EU Parliament.
As expected, RBA lowered interest rates for the second time this year by 25bp to a new record low of 1%. They left the door open to additional easing, which should have been negative for the currency but after falling initially, Aussie recovered within minutes because the central bank mentioned a few improvements in house prices, infrastructure spending and resources investment. In addition, the July cut was already 90% priced in, hence there was little surprise.
STOCK MARKET WRAP
S&P500, +0.29%, 2,973.01
Nasdaq, +0.41%, 7,799.82
Nikkei Futures, -0.49%, 21,662.5
S&P 500 (+0.29%) ended Tuesday on a modestly higher note thanks to a late push that lifted the indices out of the red. Relative weakness among small cap names sent the Russell 2000 lower by 0.6%. Countercyclical sectors recorded gains across the board, which helped the S&P 500 stage its late rally. Rate-sensitive real estate (+1.8%) and utilities (+1.2%) finished in the lead. Elsewhere, relative weakness in the Dow Jones Transportation Average (-0.8%) kept the industrials sector (-0.1%) in negative territory. Delta Airlines (DAL 58.54, +0.75, +1.3%) bucked the trend among DJTA members, after boosting its Q2 guidance.