Morning wrap (04.07.2023)

• Indices from Asia-Pacific traded sideways during the Tuesday session. Nikkei declined 0.6%, Kospi dropped 0.2% and S&P/ASX 200 gained 0.4%. Indices from China traded up to 0.8% higher

• Asian stocks faced downward pressure on Tuesday, following marginal gains in Wall Street equities ahead of the July 4th holiday

• DAX futures point to a flat opening of the European cash session today

• The S&P 500 made a slight 0.1% gain in a shortened session on Monday, while the Nasdaq 100 rose 0.2%, coinciding with a slowdown in manufacturing data

• The offshore yuan saw a slight increase after the People's Bank of China raised the daily reference rate to a higher-than-expected level in an effort to stabilize the currency. The yen also gained ground

• Yields on three-year US government bonds increased by four basis points to approximately 4%

• The RBA decided to leave interest rates unchanged, citing uncertainty in the economic outlook and maintaining a cash rate of 4.1%

• The RBA stated that further tightening of monetary policy may be necessary and that higher interest rates are helping achieve a more balanced supply and demand in the economy

• The RBA expects the economy to continue growing as inflation returns to the target range of 2-3%

• The Australian dollar slipped following the RBA's decision to pause on interest rate changes. Market pricing prior to the decision indicated around 63% odds of no change

• Cryptocurrencies are trading lower - Bitcoin drops 0.4%, Ethereum declined 0.1%

• Energy commodities trade mixed - oil trades flat while US natural gas prices drop 0.2%

• Precious metals trade up today - gold, silver and platinum ads around 0.1% while Palladium is up 1.2%

The Japanese Yen remains in a strong downtrend. The USDJPY currency pair is rising to a level of 144.6 points, despite open statements from Japanese policymakers about the possibility of currency intervention in the event of excessive currency depreciation. The last intervention by the Bank of Japan (BoJ) took place at the end of last year when USDJPY rose to a level above 150 points.