Despite the discord emanating from the G7 summit in Quebec, currency market reaction has not been particularly prevalent with markets seemingly in a ‘wait and see’ mode. In what is shaping up to be a busy week for currency markets, the Australian Dollar traded in a tight band overnight, ranging sideways between 0.7600 and 0.7622 before opening this morning at the 0.7610 level.
Although the AUD/USD has come off last weeks highs of 0.7678, this weeks busy domestic and global docket could prompt renewed volatility .Traders will be looking towards todays NAB business survey as well as the housing finance report for April as markers driving direction through the start of the week. With the RBA continually pointing to strong business sentiment as justification for it’s elevated economic growth outlook, another strong read could provide further support for the local currency. We also have US CPI data out of the US with consensus amongst economists who are predicting an outcome of 0.2% m/m with any deviation from this number expected to drive price direction.
US president Donald trump is set to meet with North Korean Leader Kim Jong-un today in Singapore and is shaping up to be a key risk event for the week. With denuclearization of the Korean peninsula a key objective for Trump, any fallout from these negotiations will likely weigh on the AUD with traders looking to shed risk. In saying that, technical resistance is seen at the 0.7670 level, followed by 0.7715 with downside supports located at 0.7575 and 0.7450 respectively.