- In its policy meeting a few hours ago, the Reserve Bank of Australia decided to leave its interest rate at 4.10%, stating that “higher interest rates are working”. This was widely expected and caused no real surprise, but it still caused the Australian Dollar to fall a bit against every other major currency.
- The risk-on rally which got renewed impetus last week from strong US economic data which showed no signs of inflation increasing may be running out of steam. Equities are generally mixed, especially in Asia where we have seen the Hang Seng Index and the Nikkei 225 Index diverge. There was little movement in US stock markets yesterday on thin trading, with the major US July 4th holiday getting underway. US markets will be closed today, likely reducing global volatility.
- The Japanese Yen remains the weakest major currency over the long term. Friday saw the USD/JPY currency pair make a new 7-month high above ¥145. Trend traders will remain interested in being short of the Japanese Yen, which has also a reached multi-year low Friday against the Euro. The Governor of the Bank of Japan has defended his ultra-loose monetary policy by pointing out that underlying inflation remains below the Bank’s 2% inflation target, although the headline rate is now above 3%.
- In the Forex market, the Japanese Yen and the British Pound have been the strongest major currencies over the Asian session, while the Australian Dollar has been the weakest. The US Dollar is continuing to rise today after rallying Friday, with the Dollar Index beginning to suggest it may soon establish a new long-term bullish trend technically, but its chart pattern is still strongly suggestive of consolidation.
- Cocoa futures are continuing to rise to new multi-year highs, attracting trend traders on the long side. The move is driven by strong demand and poor harvests in parts of Africa.
- Bitcoin closed yesterday above what seems to be a very pivotal round number at $31k, suggesting an important bullish breakout might be underway.