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AUD soared against the USD, up until the Fed decision was announced, making the pair trim part of its daily gains and decline to 0.6660 from 0.6700. This shift was likely due to the Fed’s decision to revise its interest rate outlook, indicating a more hawkish stance
The overnight session mainly focused on US CPI and the Fed, both of which significantly impacted markets. Stocks and bonds rallied strongly as US CPI for May came in lower than expected, with the headline inflation rate at 0.0% m/m, 3.3% y/y, and core inflation at 0.2% m/m and 3.4% y/y. These figures were about 0.1% lower than anticipated. As a result, US interest rates fell, and the USD weakened significantly ahead of the FOMC meeting.
The Fed kept the interest rates unchanged at 5.5%, with dot plot indicating 1-2 cuts this year, slightly less than market expectations but close. The key message was that inflation remains too high, while progress toward the target is encouraging, the committee needs more confidence that it’s sustainable before easing policy. During the press conference, Chair Powell reiterated “emphasizing that any action depends on data and no specific path is set”. The USD regained some strength following the post-CPI decline
Economic data to watch out for.
• JP – Jun-7. Japan Buying Foreign Bonds
• AU – May. Employment Change
• AU – May. Unemployment Rate
• EU – Apr. Industrial Production SA m/m
• US – Initial Jobless Claims
• US – May. PPI Ex Food and Energy MOM
• US – Fed’s Williams Interviews Treasury Sec. Yellen
Mid market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6665 |
| AUD/NZD | 1.0773 |
| AUD/JPY | 104.46 |
| AUD/CNY | 4.8402 |
| AUD/EUR | 0.6161 |
| AUD/GBP | 0.5207 |
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