Hello traders, welcome on this Tuesday morning! Today starts with a positive mood on the markets as indices flash green across the board. The primary catalyst for this upbeat sentiment is the news from China. The People's Bank of China (PBoC) announced plans to cut the seven-day reverse repo rate to 1.5% from 1.7%. Additionally, they will reduce the reserve requirement ratio, effectively lowering the amount of cash banks need to hold. This easing measure is aimed at stimulating the economy and has significantly boosted the market's mood, pushing indices higher.
In other news, we had an interest rate decision from Australia where the Reserve Bank of Australia (RBA) kept rates unchanged, as expected. RBA Governor Michele Bullock noted that recent data has not significantly impacted the policy outlook and that rates will remain on hold for now. She mentioned that the progress on underlying inflation is likely to remain slow in the third quarter, and the GDP data from the second quarter suggests a slightly softer near-term outlook. These statements initially supported the Australian dollar, but as the European session progressed, the Aussie started to decline, reflecting the cautious outlook expressed by the RBA.
On the currency market, we see strength in the Euro and Canadian dollar, while the Japanese yen and Swiss franc are the weakest performers. Safe havens are clearly under pressure today, with the yen continuing to correct its recent gains. On the commodities front, there's a robust rally, with copper up by 2% and oil climbing by 1.5%. This positive momentum in commodities aligns with the broader market optimism sparked by China’s easing measures. Later today, we will get the CB Consumer Confidence data from the US, expected at 103.9, and a speech from the Bank of Canada Governor Macklem, both of which could influence market movements further.