Easing Safe-Haven Demand Lifts Aussie Dollar

AUD

The Aussie Dollar ends the week higher against the majors while remaining flat against the USD as improved risk sentiment gives the Aussie a boost. Asian Equities ended mixed yesterday with the Nikkei trading +1.7%, Shenzhen +0.2% and Hang Seng -1.6%. The ASX 200 finished -0.6% as technology and materials sectors underperformed at -1.4% and -1.3%. No major economic data is set for release to end the week as markets shift their focus to next Wednesdays CPI inflation data. Earlier this week, Governor Michele Bullock emphasized that inflation remains too high and reiterated that further rate hikes cannot be ruled out. The RBA board continues to prioritize price stability as inflation remains above its 2–3% target. Looking across Asia, Japan will have their National Core CPI y/y which is forecasted to stay flat at 1.4% and the Monetary Policy Meeting Minutes after they hiked rates earlier this week. China will also be observing a Bank Holiday today to celebrate the Dragon Boat Festival.

USD

AUDUSD opens flat at a rate of 0.7015 as a hawkish tone from the Fed mutes the effect of easing safe haven demand pressuring the US Dollar. A strong Wall St. session saw the S&P 500 +1.1%, Dow +0.1% and the Nasdaq +1.9%. WTI Crude was -0.2% to US$76.60/barrel, whilst the yield on the US 10 year note fell 3bps to 4.45%. Overnight, US Jobless Claims released and came in marginally worse than expected with initial claims at 226k (225k exp). The data suggested that layoffs remain limited but steady and that the labor market continues to show resilience despite signs of slower hiring momentum. The Philadelphia Fed Business Outlook Survey also released for June and printed at 10.3, up from -0.4 and slightly better than expectations of 10.0. A quiet end to the week for the US as they will be observing a Bank Holiday today to celebrate the Juneteenth National Independence Day.

EUR

AUDEUR opens higher this morning at 0.6121 as the first large volumes of Saudi Oil begin passing through the Strait of Hormuz since the war began. European equities closed in the green with the DAX and CAC both up +0.4%. Yesterday the Eurozone Current Account released and showed a 15.7B surplus which was lower than expectations of 18.5B which did little to move markets. No major released expected to end the week.

GBP

AUDGBP ends the week in the green at 0.5312 after the Bank of England held the key interest rate steady at 3.75%. The FTSE also closed at -1.0%. The hold, which was in-line with the expectations of economists, was backed by seven of the nine monetary policy committee members in the BOE’s May meeting. Earlier in the day UK employment figures released which showed the Unemployment Rate ticking down to 4.9% from 5.0% but Claimant Count Change increasing by 31.2k (exp 25.8k). Later today, Retail Sales m/m is set for release and is forecasted to show a slight recovery at +0.5% from a previous decline of -1.3%.

NZD

AUDNZD opens higher this morning at a rate of 1.2184. Earlier this morning the NZ Trade Balance released and fell short of expectations coming in at 800M but was forecasted at 875M. Next week looks quiet data wise for New Zealand with markets now focused on developments in the Middle East post the US/Iran deal.