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AUD/USD rallied to just short of 0.6800 overnight because the US core CPI expanded by less than expected. However, AUD/USD quickly returned to its pre‑CPI level near 0.6750
US CPI for June was lower than expected. The overall CPI decreased by 0.1% for the month (compared to an expected 0.0%), and core CPI increased by 0.1% (Compared to an expected 0.2%). This lowered the annual overall CPI to 3.0%. In core CPI, the shelter index went up by 0.2%, with rents for primary residences and owner-equivalents both decreasing. Medical care services increased by 0.2%, while transportation services decreased by 0.5% due to a drop in airline fares. The super core CPI, which excludes housing services, fell by 0.05% for the second month in a row. On a 3-month annualized basis, core CPI is now at 2.1%, and super core CPI is at 1.3%. The market is now expecting a Fed rate cut at the 18th September FOMC meeting, with two more cuts likely by the end of 2024.
The USD weakened following the CPI release, but this change was mostly reversed within a few hours. After the buzz from the Monetary Policy Review, global developments might take centre stage for the rest of the week.
Equity markets, despite being near their highest levels ever, didn’t see significant increases because of worries about corporate earnings. Meanwhile, bond yields fell significantly after US CPI inflation data increased expectations of rate cuts. As a result, the yield on the US 10-year bond decreased by 9bps to 4.19%.
Economic data to watch out for.
• CN – Jun. Trade Balance
• Germany – May. Current Account Balance
• JP – May. Capacity Utilisation m/m
• JP – May. Industrial Production m/m
• CA – May. Building Permits m/m
• US – Jun. PPI Final Demand m/m
• CA – Jun. Existing Home Sales m/m
• US – Jul. University of Michigan Sentiment
Mid market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6761 |
| AUD/NZD | 1.1111 |
| AUD/JPY | 107.77 |
| AUD/CNY | 4.9137 |
| AUD/EUR | 0.6221 |
| AUD/GBP | 0.5236 |
AUD/USD 24 Hour
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