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AUD Up Slightly as RBA Moves As Expected; ECB conclave

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Rates as of 0500 GMT

Market Recap

It was a riskon day in Europe yesterday as most European stock markets gained. The upward revision to the Eurozone servicesector and composite PMIs propelled the STOXX 600 index up 0.34 to 458.36, almost back to last months record high of 459.86. Commodity prices were also generally higher, including several key industrial metals. US markets were closed for the Independence Day holiday.

The big news was that the OPEC talks broke down. They were supposed to resume Monday after a weekend of behindthescenes discussions, but nothing doing. As a result the output hike that was scheduled for August wont take place. That sent oil prices up further. Over the longer term though it could mean the breakdown of discipline within the cartel and a freeforall as countries try to maximize their production.

I wonder though if the US can step in to fill the gap. US oil production is down sharply from its peak in March last year, just as the pandemic sent economic activity crashing. Perhaps the higher prices will revive the US oil industry. That would be positive for USD. However its likely to take some time and its unclear whether oil companies and their bankers! will be willing to take the risk, particularly when its still difficult to hire people.

The FX market seems to be split in two some trending currencies USD, JPY, GBP, and NZD today and some that are on the sidelines CAD, CHF, EUR.

AUD appreciated modestly. The Reserve Bank of Australia RBA…

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