Aus CPI Set to Green Light RBA Cut

AUD

The AUD opens flat against most majors, with a fragile Middle East ceasefire holding for the time being. Locally, the ASX climbed +1%, with materials and financials leading the pack +2% and +1.9%. Asian equities traded strongly as the Hang Seng gained +2%, Shenzhen +1.2% and Nikkei +1.1%. Commodities overall mixed though saw some big drops in Natural Gas -13.2% and Crude Oil -5.0%. No major data out yesterday, though the big Aussie data point for the week will be released at 11:30am AEST today. CPI y/y is forecasted at 2.3%, a tad lower than the previous 2.4%, where it has spent the past three months. The continued contained inflation levels could potentially give the green light to the RBA for another rate cut in July (markets are currently pricing in 80% odds of this).
 

USD

AUDUSD opens up flat at 0.6491, following a big day of US run ceasefire talks between Iran and Israel. Another solid night on Wall St. saw the Nasdaq rise 1.4% and close at all-time highs, while the S&P 500 and the Dow Jones both posted gains of 1.2%. Overnight Fed chair Jerome Powell testified to Congress and reiterated patience on rate cuts amid pressure from Trump and looming price uncertainty from tariffs. He indicated the central bank is in no hurry to lower interest rates despite multiple calls from President Trump to drop them. He noted they are 'well positioned' to wait and learn more about the likely course of the economy, and that there's a 'significant minority' that don't agree with holding rates at the moment, although the majority of central bankers feel it will be appropriate to reduce rates later this year. Another night follows of testifying for Fed Chair Powell where we hopefully will see a clearer picture on the road ahead.

EUR

AUDEUR opens flat at 0.5591, with no major data out yesterday or today. European equities closed up with the DAX and CAC finishing up at 1.6% and 1%. We see markets still uncertain whether the conflict has come to an end between Iran and Israel as the possibilities of the end of a ceasefire cause disruption to a major oil route. The European Union rely heavily on the Imports of oil and natural gas. No Eurozone data this evening.
 

GBP

AUDGBP opens slightly down at 0.4769. The FTSE closed flat. Last night, Bank of England Governor Bailey testified before the House of Lords Economic Affairs Committee with the major talking points surrounding recent ups and downs of oil prices, US Tariffs effects still being unclear on inflation though clearer on economic growth and the path forward for rates is downwards. Tonight, MPC Member Lombardelli will be speaking.
 

NZD

AUDNZD opens flat at 1.0801, both currencies bounced back with improved risk sentiment. The NZ Trade Balance released this morning, coming out at 1,235M up from forecasted at 1,060M. No data out today until Friday, the RBNZ Statement of Intent will be released which provides insights into the bank's strategic priorities for the next financial year.