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Analysts at Westpac explained that despite further encouraging comments from both US and EU officials around trade negotiations, broad sentiment failed to lift.  

Key Quotes:

“S&P 500 closed down -0.3% and NASDAQ, down -1% on the back of Facebook’s slide. Draghi comments weighed on EUR; the US dollar index rose +0.4% and the A$ retraced all of the EU/US trade agreement gains.”

“US dollar index rose +0.4%. USD/JPY also scraped back above 1.1100 whilst AUD continued to slide from its 0.7460 high towards 0.7375. NZD held slightly better, but slid towards 0.6785. AUD/NZD drifted lower within its recent 1.0860-1.0940 range.”

“US 10yr treasury yields held tightly around 2.96% with 2yr yields firm at 2.67% and Fed fund futures were also steady.”

“From above 1.32 yesterday, GBP hit a low of 1.3106 after Barnier told reporters that “the EU cannot — and the EU will not — delegate the application of its customs policy and rules, VAT and excise duty collections to a non-member who would not be subject to the EU’s governance structures”. US durable goods were mixed but the core element (ex transport and defense) was firmer than expected (+0.6% vs. exp. +0.5%). However, the balance of worse trade and inventory data suggest that tomorrow’s 2Q GDP may be softer than current expectations.

The ECB left policy unchanged and stressed the softness in core inflation (-0.9%) and the continued need for their accommodation.”