• APAC stocks traded mixed with the regional bourses mostly rangebound amid the holiday-thinned conditions stateside
• DXY traded rangebound, EUR/USD and GBP/USD lacked direction, USD/JPY was choppy, AUD slipped after the RBA.
• The RBA decided to keep rates on hold, but maintained a hawkish tone and kept the door open for future rate hikes.
• Two drones were intercepted in the Moscow region and one in the Kaluga region, according to Russian press.
• Looking ahead, highlights include Canadian PMI, US Independence Day Holiday.

US TRADE

EQUITIES

• US stocks eked slight gains with price action kept rangebound and the upside capped in a shortened trading session ahead of the Independence Day holiday, while participants also digested weak US ISM Manufacturing PMI data.
• SPX +0.12% at 4,455, NDX +0.19% at 15,208, DJIA +0.03% at 34,418, RUT +0.43% at 1,896.
• Click here for a detailed summary.

APAC TRADE

EQUITIES

• APAC stocks traded mixed with the regional bourses mostly rangebound amid the holiday-thinned conditions stateside, while markets digested the RBA rate decision and China’s chipmaking metals export ban.
• ASX 200 was initially cautious heading to the RBA rate decision which was seen as a near-coin flip by analysts but was then supported after the central bank kept rates unchanged at the current 4.10% level.
• Nikkei 225 underperformed after slipping beneath 33,500 which also followed a pullback in USD/JPY.
• Hang Seng and Shanghai Comp gained but with upside capped as tailwinds from recent support pledges were partially offset by trade frictions after China announced to ban exports of gallium and germanium-related products from August 1st which are metals used in high-performance chips.
• US equity futures traded sideways throughout the session with US participants away for the July 4th celebrations.
• European equity futures are indicative of a slightly higher open with the Euro Stoxx 50 +0.1% after the cash market closed flat yesterday.

FX

• DXY traded rangebound amid the holiday-thinned conditions in the US for Independence Day and with the greenback also not helped by the recent weaker-than-expected US ISM Manufacturing PMI data.
• EUR/USD lacked direction following the prior day’s fluctuations through the 1.0900 level and with comments from ECB’s Nagel that they still have a way to go with policy tightening, providing little surprise.
• GBP/USD remained uneventful with price action contained by near-term resistance at the 1.2700 level.
• USD/JPY was choppy after pulling back from recent highs and in the aftermath of yesterday’s whipsawing with participants on intervention watch.
• Antipodeans were pressured late in the session following the RBA rate decision to keep rates on hold, but with downside limited as the central bank maintained a hawkish tone and kept the door open for future rate hikes.
• PBoC set USD/CNY mid-point at 7.2046 vs exp. 7.2386 (prev. 7.2157)

FIXED INCOME

• 10yr UST futures were uneventful with cash markets in the US to remain shut for Independence Day and following the prior day’s tumultuous mood which also saw the US yield curve move to its deepest inversion since 1981.
• Bund futures remained subdued after yesterday’s fluctuations and bouts of selling pressure.
• 10yr JGB futures initially weakened but were later supported by increased demand at the 10yr JGB auction.

COMMODITIES

• Crude futures mildly rebounded overnight after the prior day's fluctuations and eventual weakness despite the announcements by Saudi Arabia and Russia on extending and deepening oil output cuts for August.
• Algeria is to cut an additional 20k BPD of oil output (on top of the 48k BPD cut decided in April) to support efforts by Saudi and Russia to balance and stabilise oil markets, effective during August, according to the Energy Ministry.
• Libya's Oil Minister said he welcomed the Saudi decision to extend its voluntary oil output cut of 1mln BPD.
• Kazakhstan's section of the Caspian Pipeline Consortium (CPC) experienced a power outage, according to Interfax citing local authorities.
• Spot gold traded sideways alongside an uneventful dollar as the US celebrates Independence Day.
• Copper futures were kept rangebound amid the mixed risk appetite during Asia-Pac trade.

CRYPTO

• Bitcoin was rangebound and held on to the prior day's gains after reclaiming the USD 31,000 status.

NOTABLE ASIA-PAC HEADLINES

• US Treasury Secretary Yellen had a frank and productive discussion with China's ambassador where she raised issues of concern and conveyed the importance of the two countries working together, while they discussed maintaining open lines of communication, according to Reuters.
• US is looking to restrict China's access to cloud computing to protect advanced technology, according to WSJ.
• USITC launched an investigation into Chinese GaN semiconductor pioneer Innoscience following an IP dispute with a US competitor, according to SCMP.
• UK Foreign Secretary Cleverly criticised the decision by Hong Kong's government to issue arrest warrants for eight overseas activists which he said was an example of the authoritarian reach of China's extraterritorial law, while the US condemned Hong Kong's extra-territorial application of the National Security Law, according to Reuters. It was also reported that China accused the UK of offering protection to fugitives after bounties were placed on the Hong Kong activists, according to AFP News Agency.
• RBA kept rates unchanged at 4.10% vs near-evenly split forecasts between a 25bps hike and a hold, while it noted the Board remains resolute in its determination to return inflation to the target and further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but added that will depend upon how the economy and inflation evolve. Furthermore, the central bank stated that a significant source of uncertainty continues to be the outlook for household consumption and the Board remains alert to the risk that expectations of ongoing high inflation will contribute to larger increases in both prices and wages.

DATA RECAP

• South Korean CPI MM (Jun) 0.0% vs. Exp. 0.2% (Prev. 0.3%)
• South Korean CPI YY (Jun) 2.7% vs. Exp. 2.85% (Prev. 3.3%)

GEOPOLITICS

• IAEA Chief Grossi said in Tokyo that they will discuss Iran's nuclear programme and North Korea, while he added there is still a possibility of an incident at the Ukrainian nuclear facility, according to Reuters.
• Two drones were intercepted in the Moscow region and one in the Kaluga region, according to emergency services cited by TASS.

EU/UK

NOTABLE HEADLINES

• Local authorities in England and Wales reportedly face a funding gap of at least GBP 2bln next year as inflation impacts the ability to provide basic services, according to analysis by the Local Government Association cited by FT.