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Australian government bonds remained a little higher during Asian session on Monday ahead of the Reserve Bank of Australia (RBA) monetary policy decision, where no change in communication is expected from the central bank. Also, trading volumes will remain low due to a state holiday in Australia.
The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 1 basis point to 2.665 percent, the yield on the long-term 30-year bond traded flat at 3.160 percent and the yield on short-term 2-year dipped 1 basis point to 2.031 percent by 03:40GMT.
“Italian budget jitters dominated the European session. Italian yields surged 20-35 bps with Italian shares down nearly 4 percent. Other European bourses fell 0.5-1.5 percent. (The) U.S. Treasury yields and equities were little changed, with Kavanaugh testimony dividing the nation. In equities, financial declines were offset by utility gains. Oil rose with sell-side analysts predicting USD100/bbl prices (WTI +1.3 percent to USD73.25/bbl). Gold rebounded 0.7%, closing at USD1190.88/oz,” noted ANZ Bank.
Lastly, markets will now eye Tuesday’s RBA monetary policy statement to understand the future direction in the official cash rate.
“Geopolitical risks may get back into the front seat, as speculation is increasing that talks between the US and China may hit another bump in the road; especially after President Trump recently accused China of meddling in the US mid-term elections. An eventual escalation in the US-China trade dispute will weigh heavily on sentiment, so this is a space to watch,” noted ANZ Bank.
“In the RBA statement we expect little change and little impact for the AUD.”
Meanwhile, the S&P/ASX 200 index traded 0.19% lower at 6,160.5 by 04:00 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -42.09 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex
