Australia: Overnight, The Peoples Bank of China raised interest rates by 25 basis points, taking the one year lending rate to 6.56% and the one year deposit rate to 3.5%.

Looking forward this move by the PBoC is designed to help contain inflation and is a positive move, as the Chinese GDP growth is likely to show continued solid growth in the months ahead. Base metals were mixed overnight with copper down 0.2%, aluminium down 0.7% and nickel up 0.3%. Gold was up 1.1% to US$1,529.30 while oil fell slightly to be trading at US$ 96.65 a barrel.

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Today locally will see the release of the Australian employment data for June, with the market forecasting a slight increase of 15k for the month. Should the employment data disappoint the AUD is likely to come under some selling pressure as it will add weight for the RBA to remain on hold for the near term.

Majors: The EUR was weaker overnight following the news that Moody’s have downgraded Portugal’s debt rating. The European politicians made there voices heard saying that they are anti-European given the two big agencies are US owned.

The Moody’s downgrade also weighed on European equity markets with the DAX down 0.1% the FTSE down 0.4%. Tonight will see the both the ECB & BOE announce possible rate changes, with the market expecting the ECB to raise rates while the BOE is expected to remain on hold.

The German Factory Order data reported a rise of 1.8% for the month of May taking the reading to up 12.2% year on year. In the US overnight equity markets recovered to finish positive with the DOW up 0.5% the S&P 500 up 0.1% and the NASDAQ up 0.3%.

The US ISM Non-Manufacturing data came in at 53.3 for the month of June down from 54.6 in May and below the markets expectations.

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