• US and European equities lower on US-China trade war implications
  • AUDUSD down c.0.7% overnight after dovish RBA minutes
  • Barclays Research expects two RBA cuts by August 2019

US and European equities fell yesterday as the implications of the trade dispute between US-China weighed on technology stocks. It has also been reported that China is going to retaliate after President Trump blacklisted Huawei (Bloomberg)
However, the US did grant Huawei a temporary general license that authorises some transactions with the Chinese firm and its non-US affiliates
Most Asian indices rose overnight. Technology shares rebounded in the region as companies such as Samsung were speculated to benefit from Huawei’s blacklisting
GBPUSD traded in a relatively tight range yesterday as there were no meaningful developments regarding Brexit but has come lower this morning, breaking below 1.2700, amid broad-based USD strength. Focus for GBP is the PM May’s Cabinet meeting today
Elsewhere in FX, AUDUSD sold-off c.0.7% overnight after RBA minutes showed a distinctly more dovish stance than the latest rate decision statement. RBA Governor Lowe suggested the central bank will consider a rate cut in June if there is no improvement in employment or inflation data
Barclays Research has now changed their baseline view and expects two cuts from the RBA this year. The first in June and another in August, bringing the key rate to another historic low of 1.0%
The market is currently pricing in nearly a 90% probability of a cut by June 2019 and a 20% probability of a second cut in August (Barclays Research)