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Risk appetite improves – Aussie recovers to 69 US cents

AUD - Australian Dollar

The Australian Dollar was muted once again during the Asian session yesterday trading in a tight 20-point range. Opening the morning at 0.6880 there was little movement following the release of local Flash Services and Manufacturing PMI readings for the month of May as output rose for the first time in four months.

A brief risk off rally spurred the Aussie higher in offshore markets overnight, reaching a high of 0.6904 following a pullback for the greenback as both flash services and manufacturing PMI in the United States disappointed.

From a technical perspective, the AUD/USD pair is currently trading just above the 69 US cent level. We continue to expect support to hold on moves approaching 0.6860 while now any upward push will likely meet resistance at 0.6940.

Key Movers

The US Dollar was the main mover overnight as a risk off rally in markets saw the greenback dip against all G10 currencies. The US Dollar Index (DXY) pulled back from intraday highs of 98.37 to 97.85 on early morning trading as the ongoing trade war between the United States and China battles on. Stagnating Manufacturing and Service PMI figures in the United States did no favours to the worlds most traded currency as the US private sector output fell to a three year low in May.

Investors turn their attention to the European markets as polls close across the continent for the 2019 European elections. Expectations that the EUR/USD cross could see more volatility over the coming days. With elections occurring once every five years, it is anticipated that the rise of Eurosceptic parties could gain over 1/3 of all votes as social unrest is seen within the Eurozone.

On the agenda today sees the release of Retail Sales in the UK along with United States Core Durable Goods orders to close off the week.

Expected Ranges

AUD/USD: 0.6860 - 0.6950 ▲

AUD/EUR: 0.6120 - 0.6200 ▲

AUD/NZD: 1.0500 - 1.0600 ▼

GBP/AUD: 1.8100 - 1.8500 ▼

AUD/CAD: 0.9250 - 0.9350 ▲