Aussie Dollar Holds Gains
AUD
The Aussie Dollar has held recent gains, buoyed by optimism surrounding renewed trade talks between China and the US. Today, officials are set to meet for a second day of trade talks in London, seeking to shore up a shaky tariff truce in a spat further strained by export curbs. Yesterday, the Westpac-Melbourne Institute Consumer Sentiment Index rose 0.5% to 92.6 in June from 92.1 in May. The results show two clear opposing forces at work. The Reserve Bank of Australia's May interest rate cut and moderating inflation are providing significant boosts. But against this, more sluggish domestic growth, and the unsettled situation around global trade, are continuing to weigh heavily on expectations. Asian equities traded mixed on Tuesday, the Shenzhen down -0.5%, the Hang Seng -0.1%, and Nikkei up +0.3%. Locally the ASX gained +0.8%, with technology and consumer discretionary leading the pack. Commodities closed mostly in the green with Gold and Silver both +0.1%, while Iron Ore +0.6%, and Copper -0.7%. Quiet day ahead for domestic news releases with the next even being MI Inflation Expectations tomorrow at 11am.
USD
AUDUSD opens slightly higher this morning at 0.6527 after the US dollar dropped marginally lower, and the AUD strengthened, after talks between Beijing and Washington continue for a second day amid expectations of a trade deal that could further ease trade tensions. President Trump also spoke earlier in the morning however monetary policy was not mentioned as he was delivering remarks to troops at Fort Bragg. Wall Street remained positive in the close with the Dow Jones +0.2%, S&P 500 +0.5%, and the Nasdaq +0.6%. Looking at tonight, the focus will be on the U.S. Consumer Price Index report. The report could give insight into the impact of tariffs, with markets being wary of any flare-ups in inflation ahead of the Fed's policy meeting next week, with the US central bank expected to hold rates steady next week. The consensus is for the headline measure to remain unchanged at +0.2% MoM, while the core measure is expected to accelerate to +0.3% MoM (prev. +0.2% MoM). Annual headline consumer inflation is expected at 2.5%, up from 2.3% last month. Most importantly, the core measure excluding volatile food and energy prices - the focus for Fed officials - is seen rising to 2.9%, the highest reading in three months.
EUR
AUDEUR opens higher this morning at 0.5707 despite Italian Industrial Production m/m and Sentix Investor Confidence all coming through higher than forecasted late last night. Eurozone equities closed mixed with the DAX -0.8% and the CAC +0.2%. It will be a quiet day and week ahead for Eurozone news with the only release today being German 10-y Bond Auction set as tentative, and a few more minor releases spread throughout the week.
GBP
AUDGBP opens higher this morning at 0.4833 after some lackluster employment data out of the UK yesterday with the Average Earnings Index 3m/y showing the payroll decreasing for UK employees by 0.2%, while the Claimant Count Change increased to 33.1K, from the forecasted 9.5K. The Unemployment Rate also increased, coming through as forecasted at 4.6%. The FTSE closed in the green up 0.2%. Looking at UK news, we might see 10-y Bond Auction release however it is set as tentative, all eyes however will be focused on the GDP m/m set for release tomorrow expected to decrease from 0.2% to -0.1%.
NZD
AUDNZD remains mostly unchanged, slightly up this morning at 1.0772 despite their Visitor Arrivals m/m increasing by 2.3%. It will be another quiet week for news from our Kiwi neighbours with the next release being BusinessNZ Manufacturing Index set for Friday morning.