July 05, 2022 09:22 GMT
- The EUR/USD primary downtrend resumes Tuesday, with the pair taking out the earlier YTD lows at 1.0350 to put prices at levels not seen since 2002. The acceleration lower in the pair coincides with the return of US markets after the July 4th holidays, with lower-than-expected French services and composite PMI data adding extra weight.
- This underpins a broader risk-off theme, evident in lower equity markets and lower Treasury yields headed into the NY crossover. The US 10y yield has reversed early upside to sit within range of the July lows printed on Friday at 2.7873%. A break below that level would mark the lowest 10y yield since late May and a ~75bps turnaround off the mid-June highs.
- The Reserve Bank of Australia raised rates by 50bps overnight to 1.35% - alongside expectations. The decision prompted little immediate market response, with the RBA signaling further tightening steps to come. Through the European open, however, broad greenback strength has worked against AUD/USD, putting the pair briefly below 0.68 and within view of the 2022 lows at 0.6764.
- Focus going forward turns to factory orders and the final durable goods data for May, while BoE's Tenreyro is also due to speak following the publication of the BoE's Financial Stability Report.