The AUDUSD opened at 0.6766 (mid-rate), and the NZDUSD opened at 0.6537 (mid-rate) this morning.
This afternoon the RBA is widely expected to keep interest rates on hold while it accesses the effect of two consecutive cuts in June and July, but we expect the accompanying statement to echo Philip Lowe’s recent comments that the RBA are prepared to cut rates further if needed.
The NZD which is holding up reasonably well, all things considered, will be dictated by this morning’s quarterly employment report ahead of tomorrow afternoon’s RBNZ monetary policy statement.
The Japanese yen is the strongest performer among the G10 currencies, while gold and global bonds have also rallied strongly as investors load up on safe havens.
Global equity markets are in free-fall after China’s central Bank allowed its yuan to fall below the politically sensitive 7-per-US dollar for the first time in more than a decade. At the same time China announced its companies have halted purchases of US agricultural goods as the US-china trade war escalates.
President Trump has accused China of “currency manipulation” and is again calling on the Federal Reserve to cut rates further to counter China’s action.
Yield on the benchmark US-10-year Treasury note has tumbled to around 1.74% its lowest level during Trump’s Presidency with the market now pricing in a further four 25 basis points of cuts to the Federal funds rate over the next 12-months.
Global equity markets have nose-dived, - Dow -4.11%, S&P 500 -4.05%, FTSE -2.47%, DAX -4.85%, CAC -2.19%, Nikkei -1.74%, Shanghai -1.62%.
Gold prices have surged higher up 1.7% trading at $1,465 an ounce. WTI Crude Oil prices have fallen sharply, down 1.7% trading at $54.69 a barrel.
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