Fed Holds Rates for 4th Straight Meeting
AUD
The AUD is trading higher against the majors after a gradual unwinding of recent geopolitical fears. Aussie equities were slightly lower yesterday, with the ASX down 0.1%, while the Shanghai Comp held flat, highlighting a cautious tone across regional equity markets amid the broader geopolitical backdrop. Today’s key labor market data is expected to show Employment Change at 20.6K, a notable drop from the previous 89.0K, while the Unemployment Rate is forecast to hold steady at 4.1%. Tomorrow’s session is expected to be relatively quiet on the data front, keeping the market’s focus on broader risk sentiment and geopolitical developments.
USD
The AUDUSD has remained resilient, opening stronger at 0.6508, supported by a stable domestic outlook and broadly weaker USD sentiment. While the pair continues to trade within recent ranges, markets will be watching closely for any shifts in risk appetite or U.S. data surprises that could drive the next move. Wall St. ultimately ended relatively flat with Nasdaq closing +.1%, the Dow Jones -.1%, and the S&P 500 unchanged. Yesterday’s data showed Unemployment Claims came in at 245K, slightly better than the forecast of 246K, and down from the previous 250K. Earlier this morning, the Federal Funds Rate was held steady at 4.50%, in line with expectations, alongside the release of the FOMC Economic Projections and Statement, followed by the FOMC Press Conference. Notably, the central bank revised down its expectations for economic growth while marking higher its outlook for inflation, with policymakers torn on whether to cut rates again in the remainder of 2025. Futures markets have a different view, with 43bps in cuts currently priced in by year-end. No US data today with the Juneteenth public holiday.
EUR
The AUDEUR has shown modest strength, opening at 0.5669, supported by the Aussie’s resilience amid geopolitical uncertainty and relatively stable European economic data. With the Euro facing ongoing challenges from regional energy concerns and inflation pressures, the pair is likely to remain sensitive to both risk sentiment and central bank signals from Europe and Australia. European equities edged lower, with the DAX slipping 0.5% and the CAC declining 0.4%. Data releases have been notably light yesterday, today, and are expected to remain so tomorrow, with the next major economic reports scheduled for Monday (Flash PMIs).
GBP
The AUDGBP pair has shown some stability recently, opening at 0.4851, supported by the Australian Dollar’s relative strength and lingering concerns over the UK’s economic outlook amid inflation pressures and political uncertainties. The FTSE gained +0.1%. Yesterday’s CPI data showed a year-on-year increase of 3.4%, slightly above the forecasted 3.3%, but marginally below the previous 3.5%, indicating persistent inflationary pressures. This afternoon we'll see the Bank of England's key interest rate decision. The Official Bank Rate is expected to remain steady at 4.25%, but some disappointing jobs numbers, lower wage growth and a more optimistic outlook for services inflation means economists expect further interest rate cuts in the coming months. Tomorrow’s Retail Sales are forecasted to decline by 0.5% month-on-month, following a stronger 1.2% increase in the previous period, signaling potential softness in consumer spending ahead.
NZD
The AUDNZD pair opens a little higher at 1.0790. Investors are closely watching upcoming data from both countries for any signs of divergence that could influence the pair’s direction. Data was quiet yesterday, with this morning’s GDP figures showing a quarterly increase of 0.8%, ahead of the forecasted 0.7% and the previous 0.5%. Looking ahead, tomorrow is a public holiday in New Zealand.