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Market Update 24/06/2024

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The AUD/USD loses ground for the third consecutive day around 0.6640. The downtick of the pair is backed by the stronger USD after the optimistic US S&P Purchasing Managers Index (PMI) data for June.

The yield on the US 10-year remained steady at 4.26%. The US composite PMI for June rose slightly to 54.6, with the services PMI increasing to 55.1 and manufacturing improving to 51.7. Service output prices dropped to 53.4, down from this year’s peak of 56.6 and a series high of 73.3 in April 2022. Service prices are now within the pre-pandemic range of 50-55. Services employment climbed to 51.4, marking its first time above 50 in three months. In Europe, both the services and manufacturing PMIs were weaker than expected, at 52.6 and 45.6. Germany’s PMI declined further from 45.4 to 43.4.
Markets viewed both weaker and stronger PMI reports negatively on Friday. Weak European PMIs initially led to risk-off sentiment, but later, stronger US PMI data raised concerns about a potential delay in the Fed’s rate cut timeline. The USD generally strengthened, with the DXY (dollar index) rising by 0.2% to reach a 6-week high.
USDJPY maintained a 0.4% gain after surpassing 159.00, nearing the psychological threshold of 160.00, which previously triggered intervention by Japanese authorities. Markets will continue testing these limits. It’s worth noting that the BoJ reportedly spent over 62 billion in intervention to push the rate down to 155 last time. The question now is how much would be needed to achieve the same result this time, and whether the BoJ is willing to do it. It seems likely that JPY will be the focus this week.
It’s a quiet day ahead for data releases. Domestically, the focus is the May trade balance. Later tonight, the German IFO business activity index will be released. Investors will be watching to see if the IFO reflects the same weakness observed in the PMIs.

Economic data to watch out for.

NZ – May. Trade Balance NZD
• JP – May. Nationwide Dept. Sales y/y
• Germany – Jun. IFO Business Climate
• Germany – Jun. IFO Current Assessment
• Germany – Jun. IFO Expectations
• US – Jun. Dallas Fed Manufacturing Activity

Mid market rates.

Currency PairMid-market rate


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