AUD slides back into the familiar range unable to hold onto push above US$0.65
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Daily Currency Update
The Australian dollar fell Tuesday as it faced a stronger US dollar and renewed demand for US equities. Risk sentiment improved after US and EU trade tensions eased following a Truth social post from President Trump wherein, he announced the US and EU had agreed on a series of key meeting dates. With the US DXY index up three-quarters of a percent, the AUD slid below US$0.6450, comfortably back below US$0.65 and well short of Monday’s 6-month high. While our longer-run AUD outlook remains positive significant near-term uncertainties and barriers are preventing an extended upward push.Our attention today turns to domestic inflation markers. Monthly CPI is expected to rise back above 2.5% while the RBNZ policy meeting and FOMC meeting minutes headline the macro ticket.
Key Movers
The USD dollar outpaced most majors on Tuesday as investors and analysts returned from the Memorial Day long weekend and responded to the de-escalation of US/EU trade tensions. On Sunday President Trump recalled his threat to impose a 50% tariff on the EU adding further support to equity markets and risk assets overnight announcing the EU and the US have established a series of key meeting dates, stating “This is a positive event and I hope will finally open up European Nations to trade with the US”. As tensions seemingly eased key equity indices rallied with the S7P 500 and Nasdaq both up leading into the daily close. With risk sentiment improving and global rates falling the JPY underperformed allowing the USD to push back through 144. It was in fact the worst performer on the day giving up ground to all major counterparts, while the euro and GBP are also weaker against the USD. French inflation data printed lower than anticipated and ECB officials noted that the board's 2% inflation target is now within reach.Our attention today remains on trade headlines and the RBNZ Monetary policy statement.
Expected Ranges
- AUD/USD: 0.6380 - 0.6530 ▼
- AUD/EUR: 0.5650 - 0.5750 ▼
- GBP/AUD: 2.0750 - 2.1100 ▲
- AUD/NZD: 1.0780 - 1.0920 ▲
- AUD/CAD: 0.8820 - 0.8920 ▼