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AUD/USD trades near 0.6615 amid the consolidation of the USD in Monday’s early Asian session. Meanwhile, the DXY hovers around near 105.50 after retracing from its highest level since early May. Market participants will closely monitor the RBA interest rate decision on Tuesday, with no change in rate expected.
Equity markets remained under pressure and the yield on US 10-year dropped 2bps to 4.22% due to European political uncertainty and weak US consumer confidence. The University of Michigan’s preliminary reading dropped 3.5 points to 65.6, the lowest in seven months. Current conditions weakened significantly to 62.5 from 69.6, suggesting consumers might be cutting back on spending. Expectations declined to 67.6 from 68.8. Inflation expectations for the next 12 months remained steady at 3.3%, while 5-10 year expectations increased by 0.1% to 3.1%. The USD strengthen overall, with the biggest gains against European currencies. French political concerns are putting pressure on the EUR, which is keeping the USD DXY high despite declining bond yields. This is expected since the EUR comprises 57.6% of the DXY index.
Economic data to watch out for.
• CN – 1-Yt Medium-Term Lending Facility Rate
• CN – May. New Home Prices m/m and May Fixed Assets Ex Rural YTD y/y
• CN – May. Industrial Production y/y
• CN – May. Property Investment YTD y/y
• CN – May. Retail Sales y/y and May. Surveyed Jobless Rate
• EU – ECB’s Lane, Knot Speak
• CA – May. Housing Starts
• US – Jun. Empire Manufacturing
• CA – May. Existing Home Sales m/m
• US – Fed’s Harker Speaks
Mid market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6615 |
| AUD/NZD | 1.0775 |
| AUD/JPY | 104.18 |
| AUD/CNY | 4.8093 |
| AUD/EUR | 0.6178 |
| AUD/GBP | 0.5214 |
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