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    Markets in risk-on mood

    This morning, we had the decision of RBA which supported the AUD being the best performing currency amid G10. Moreover, we note that the USD has been under pressure after Yellen’s speech. Moreover, we observe better sentiment on equity markets.

    The Reserve Bank of Australia has signaled it is in no rush to cut interest rates again as it kept the official cash rate on hold at a record low 1.75 per cent in June, sending the Australian dollar soaring.

    Federal Reserve Chair Janet Yellen said on Monday that interest rate hikes are likely on the way because positive economic forces have outweighed the negative for the United States now that risks from earlier this year have diminished. The FED chair’s Monday comments put a damper on any hopes of a rate hike anytime soon. Wall Street lowered the odds of a July rate hike to 21.6 percent after her most recent comments, down from a 58 percent last week, according to the Fed funds futures rates. A June hike was pretty much taken off the table after Friday’s May jobs report, and Wall Street lowered the odds to 2 percent.

    Chinese forex reserves has fallen for the first time in 3 months and reached multi-year low. Although the change is not big ( 3.19t $ vs. 3.22t $) previously it should be noted. There were some rumours that capital outflows started once again in China and the change in reserves is in line with them.

    An explosion hit Istanbul’s Beyazıt district at the Vezneciler metro station as a riot police shuttle bus was passing on Tuesday morning. The explosion took place at the metro station close to Istanbul University at around 8:30 am. The USDTRY jumped 100 pips after the news.

    The pound jumped as much as 1.5 percent against the dollar within seconds on Tuesday, as a gauge of expected volatility surged before the U.K. votes in just over two weeks on whether to remain in the European Union.  There was no specific information that could have moved the market so much. It’s likely that a lot of Stop losses have been hit, but it’s still a mysterious move.

    Later on, we have the central bankers speeches, five ECB members are expected to speak later today. We will also hear from Eric Rosengren (FED) who will join ECB’s Liikanen in Helsinki. 

    Any person acting on this information does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.

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