At the close of trading on Friday, the US dollar was the day’s strongest major currency, while the Australian dollar was the worst. Most notably, the AUDUSD exchange rate dropped by 1.59 percent. Despite chances favoring a hold before to the decision, the RBA decided to leave interest rates unchanged. As a result, there was a degree of doubt. The Australian dollar may have reversed course today due to the fact that it spiked on Monday in anticipation of the verdict.
The Australian dollar fell against the US dollar, testing the 0.6594 to 0.6603 lows seen in June and July. The day’s low was somewhere in that range, at 0.66015. A slight increase brought the price to 0.6613 just before the market closed. A break of the new day’s low below 0.6694 would signal the beginning of a new downtrend. Shorts may be compelled to cover – at least temporarily – on the failure to break below the June and July lows, thus a return above 0.6622 and a swing area between 0.6636 and 0.6652 would boost the bullish tilt.
The ISM factory PMI came in at 46.4, which was lower than the forecasted 46.8. For the ninth week running, manufacturing activity indicators have been below the 50 mark. Prices Paid in the report came in at 42.6, which was lower than expected (42.8) but higher than the 41.8 seen in the previous month. The employment index dropped dramatically, coming in at 44.4 instead of 48.0 or 48.1 as was predicted or seen previously. Finally, New Orders increased to 47.3 from 45.6 before the uptick. According to the numbers, manufacturing is still contracting, but new orders are on the rise.
The June JOLTs report showed a decline in hiring activity. The number of available jobs was 9.582 million, which was somewhat lower than the predicted 9.610 million. The percentage of available jobs has stayed the same, at 5.8%. Total separations, which include quits, layoffs, and other separations, declined to 5.6 million from 5.7 million the previous month, while the rate of hires stayed stable at 3.8%. In the meantime, the ‘quits’ rate fell to 2.4%, with 3.8 million fewer employees leaving their positions willingly. The employment rate has leveled off, which is encouraging since
The presidents of the Federal Reserve Banks of Chicago and Atlanta, respectively, spoke, with both expressing a more dovish perspective (in line with their previous inclination).
Austan Goolsbee suggested that a rate cut would be a very long-term possibility. He pointed out that investors are betting big that the Federal Reserve will be able to curb inflation. The most recent JOLTS data, according to Goolsbee, is consistent with a robust labor market that is entering a more balanced phase of development. As the Federal Reserve manages this economic shift, FOMC decisions have been “close calls,” he said. He also shared his ‘closet’ optimism about the future of the economy and the importance of making steady progress on inflation. God dammit Buchan shipped.
Raphael Bostic, president of the Atlanta Federal Reserve, has voiced his concern over the current state of the economy, citing the possibility of overtightening. He now anticipates no rate reductions prior to the second half of 2024. Although Bostic agrees that current inflation rates are too high, he thinks substantial progress has been achieved in addressing the problem. He thinks recent numbers are consistent with a measured slowdown in economic activity. Bostic admitted that he would have voted for a rate hike in July despite his reservations about overtightening. He also said that he would be willing to consider a rate hike if efforts to reduce inflation stalled. Next year, the Federal Reserve will have Bostic, a dovish voice, on its policy-setting council.
Taking a look at the market reveals :
- Oil prices have recovered from their previous losses and are now trading up $0.35, or 0.43 percent, at $82.15. Price action dating back to November indicates it may soon reach a high maximum of $82.48 to $83.44. A breakout above that region could prompt sellers to place stops there. If the price were to break out, the 38.2% retracement of the decline from the 2022 high would be the next point of interest. That price tag amounts to $86.72. The cost of crude oil rose by 15.7 percent in June alone.
- As the US currency strengthens, the price of gold plummets. The current price is $1944.01, a decrease of $-21.54 (1.10%).
- At $24.29, silver is down $0.45, or 1.82%.
- Bitcoin’s price hit a low of $28,574 before recovering to its current level of $29,191.
The rise in US yields today bolstered the dollar.
- Yield on 2-year bond: 4.903%, +3.0 bps
- Yield on 5 year bond is 4.221 percent, up 4.2 bps
- Average yield on a 10-year bond is 4.033% (+7.6 bps)
- Yield on the 30-year bond is 4.10%, +0.5% basis
The major US stock market indices ended the day with mixed results, with the Dow industrials gaining and the NASDAQ declining. There was a slight decline in the S&P:
- The gain of 71.15 points (0.20%) brought the Dow to 35630.69.
- At 4576.72, the S&P index dropped 12.25 points, or -0.27 percent.
- At 14283.90, the NASDAQ index was down -62.12 points (-0.43%).
After-hours revenue consists of:
- The American International Group, Inc. (AG) HAS OUTPERFORMED EXPECTATIONS, with EPS of 1.75.
- Better-Than-Expected Results from Advanced Micro Devices Inc (AMD): Earnings Per Share ($0.58) $5.36 Billion ($5.31 Billion)
- Failure to Meet Expectations: Devon Energy Corp. (DVN) Earnings Per Share 1.18 on Revenue 3.45 billion on Expected 3.74 billion
- BEAT: Match Group Inc. (MTCH) EPS 0.49 vs. 0.45 forecast; Revenue 844 MM vs. 811.4 MM forecast
- Mosaic Company (MOS) FAILED with EPS of 1.04 on Revenue of $3.39B on Expected $3.12B.
- Results for Pinterest Inc (PINS) beat estimates across the board, with EPS of 0.21 on revenue of 708.2 million.
- Results for VF Corp (VFC) fell short of expectations in both earnings per share (EPS) and revenue ($2.10 billion against $2.07 billion).
- Failure to Meet Expectations: Starbucks Corporation (SBUX) EPS 1.00 on Revenue 9.20B on Expected $0.95
- Revenue of $1.924 billion was above estimates of $1.59 billion, while earnings per share came in at $1.47, both for Electronic Arts Inc (EA).
- Ahead of estimates in both earnings per share (EPS) at $4.26 and revenue at $2.90 billion was Caesars Entertainment Inc (CZR).
- Earnings per share of $3.89 for VRTX surpassed estimates of $3.88, and revenue of $2.49 billion surpassed projections of $2.42 billion.
Earnings reports from CVS, Humana, and Kraft Heinz are scheduled for tomorrow morning. PayPal, Shopify, Qualcomm, Unity Software, and Etsy will all release results after the market closes. All of these companies will report on Thursday: Amazon, Apple, Coinbase, AirBnB, and DraftKings.
In the foreign exchange market, the technicals involving the major currencies against the US dollar are reviewed in the video linked below. Currency pairs EURUSD, GBPUSD, USDJPY, USDCAD, and AUDUSD are discussed in detail, along with their respective biases, risks, and expected outcomes.
