Round-up
The aftermath of the Donald Trump’s assassination attempt over the weekend saw Wall Street edge higher overnight, US dollar firmed, gold prices were higher, and the US Treasury yield curve steepens. With the odds of a Trump presidency lifted after the event, markets are back to pricing for the potential inflationary impact of his policies amid a quieter front on the economic calendar. Attention may likely take more cues from the US earnings season moving forward, as we look towards Morgan Stanley and Bank of America’s earnings today, while Netflix’s results this week will also set the backdrop for upcoming tech earnings.
Wall Street performance continued to see the “laggard trade” playing out, with the small-cap Russell 2000 index extending its gains by another 2% overnight. Within the sector performance table, energy and financials have pulled ahead from the rest.
Perhaps one to take note is that the VIX rose 5.3% overnight alongside the major US indices, which highlights increased caution amid recent gains. If the trend continues, it is likely to raise more questions on the rally’s near-term sustainability, at a time where technical conditions are trading at near-term overbought conditions.
AUD/JPY back at crucial trendline for some defending
The AUD/JPY has retraced more than 2% over the past week, with the pair reeling in from suspected yen intervention efforts, along with weaker China’s economic data which weighed on the AUD. A near-term upward trendline at the 106.51 level is being put to the test currently, while its daily relative strength index (RSI) is back at its key 50 level, both of which will have to see some defending from the bulls to keep the upward bias intact. Apart from a brief dip in June this year, its daily RSI has never broken below the mid-line since March 2024, which reflects buyers in broader control.
Any move below the 106.51 level could leave the 104.90 level on watch as the next line of support. On the upside, its recent high at the 109.20 level will be a key resistance to overcome, given the strong selling pressures sighted on 11 July.
