Australian Dollar Futures Market News and Commentary
The dollar index (DXY00) this morning is up +0.363 (+0.38%). Sep euro-fx futures (E6U9) are down -0.0047 (-0.42%), and EUR/USD (^EURUSD) is down -0.0053 (-0.47%). Sep yen futures (J6U9) are down -0.26 (-0.28%), and USD/JPY (^USDJPY) is up +0.43 (+0.40%). The dollar index is higher this morning on reduced speculation about a 50 bp FOMC rate cut at its July 30-31 meeting and also on some US/Chinese trade optimism after US/Chinese top officials held a conference call late Thursday. The New York Fed late Thursday walked back Thursday's comment from New York Fed President Williams that "it pays to act quickly to lower rates at the first sign of economic distress" by saying that the comment was academic talk based on 20 years of research and was not about potential Fed policy actions. That curbed speculation the Fed may cut rates by 50 bp at the July 30-31 FOMC meeting. The dollar added to its gains today on comments from St. Louis Fed President Bullard who said, "a 25 bp rate cut by the Fed would be appropriate as the current situation doesn't warrant a larger rate cut." EUR/USD was undercut by today's decline in the German June PPI to a 2-1/2 year low of +1.2% y/y (vs expectations of +1.5%), which sent the 10-year German bund yield down to a 1-week low of -0.330% and hurt the euro's interest rate differentials. USD/JPY moved higher today as a rally in stocks reduced the safe-haven demand for the yen.