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    S&P’s downgrades Australia’s credit outlook to negative

    Market Brief

    G10 Advancers and Decliners vs USD
    NZD 0.80
    JPY 0.52
    GBP 0.38
    CAD 0.10
    CHF -0.03
    EUR -0.09
    DKK -0.10
    NOK -0.12
    AUD -0.17
    SEK -0.19
    Global Indexes Current Level % Change
    Nikkei 225 Index 15276.24 -0.67
    Hang Seng Index 20651.31 0.76
    Shanghai Index 3015.434 -0.06
    FTSE futures 6466.5 0.79
    DAX futures 9411 0.56
    SMI Futures 7917 0.43
    S&P future 2090.1 -0.19
    Global Indexes Current Level % Change
    Gold 1366.48 0.2
    Silver 20.05 -0.19
    VIX 14.96 -3.98
    Crude wti 47.52 0.19
    USD Index 96.06 0

    It was a relatively quiet FX session in Asia with the pound sterling stabilising after the early week sell-off, the Japanese yen partially erasing yesterday’s losses and crude consolidating Wednesday’s gains. After a dreadful equity session in Europe, US equities started the day on firmer footing closing in positive territory and setting the tone for the Asian session. On Thursday, Asian regional equity markets were broadly mixed with Japanese and mainland Chinese shares trading in negative territory, while other Asian markets blinked green across the screen. The Nikkei 225 was down 0.67% as the yen strengthened, while the broader Topix index slid 0.66%. Chinese mainland shares fell 0.20%, while in Hong Kong the Hang Seng rose 0.75%, following Wall Street’s lead. Market participants are still fairly hesitant and continue to try to assess the implications of the United Kingdom’s decision to exit the European Union. In Europe, equities are set to start the day on firmer footing with most futures trading higher.

    Australia is now one step closer to losing its triple-A sovereign credit rating as Standard & Poor’s downgraded the country’s long-term outlook from stable to negative amid mounting concern about fiscal imbalances. The agency declared “The negative outlook on Australia reflects our view that prospects for improvements in budgetary performance have weakened following the recent election outcome,”. Initially, the Australian dollar dropped 0.94% to 0.7467 but quickly recovered to 0.7520 as investors realised that ultimately this does not make much difference. S&P’s message is after all more of a warning to the future government reminding them that they must enhance the country’s fiscal strength. AUD/USD continues to trade within its bullish channel. On the upside a resistance can be found at around 0.7648 (high from June 23rd), while on the downside a support lies at 0.7286 (low from June 16th).

    The New Zealand dollar surged 0.80% in Wellington amid the RBNZ’s deputy governor comments about the housing market. Grant Spencer declared that the central bank was considering a tightening of the Loan-to-Value ratio to limit upside pressure on the housing market from investors. NZD/USD hit 0.7197 in late Asian session. The closest resistance can be found at 0.7241 (high from July 4th). Like other commodity currencies, the Kiwi will remain highly sensitive to the global risk sentiment and developments in the Brexit story.

    Today traders will be watching foreign currency reserves and CPI report from Switzerland; budget balance from Sweden; Halifax house price from the UK; industrial production from Norway and the UK; ADP unemployment change, initial jobless claims and crude oil inventories from the US.the US.


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