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AUD under pressure as USD strengthens and markets digest softer inflation data

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AUD under pressure as USD strengthens and markets digest softer inflation data
The Australian dollar came under pressure overnight, slipping toward the lower end of its recent range as broad-based US dollar strength outweighed a softer-than-expected Australian inflation reading. AUD/USD traded between 0.6883 and 0.6924 before settling near 0.6900, with selling accelerating through the European and New York sessions. The move came despite May CPI slowing more than forecast, reinforcing expectations that inflation pressures are gradually easing. Meanwhile, a decline in oil prices and lower US Treasury yields reflected improving confidence around global energy supply conditions, helping to temper broader market volatility.
Global markets delivered a mixed performance, with gains in the Dow Jones offset by modest declines in the S&P 500 and Nasdaq. Asian equities were similarly mixed, while the ASX 200 advanced as strong performances in technology and healthcare stocks supported sentiment. The US dollar remained well supported throughout the session, pushing USD/JPY toward fresh highs above 161.80 and renewing focus on the risk of further yen weakness. Notes that without a stronger policy response, the Japanese yen could face additional depreciation pressures, particularly if yield differentials remain wide. Looking ahead, currency markets are likely to remain sensitive to evolving central bank expectations, global growth signals and developments in energy markets.

 

General Market

Wall Street

  • Dow Jones: +0.35% to 51,854
  • S&P 500: -0.10% to 7,358
  • Nasdaq: +0.13% to 29,786

 

Asia-Pacific

  • ASX 200: -0.26% to 8,770
  • Nikkei: +0.10% to 71,124
  • Shanghai Composite: -0.12% to 4,740

 

Europe

  • FTSE: +0.02% to 10,442
  • DAX: -0.62% to 24,740
  • CAC: +0.43% to 8,377

Headlines to Watch

United States

  • Core PCE inflation → key determinant of Fed rate expectations
  • Final Q1 GDP → gauge of underlying economic resilience
  • Durable Goods Orders → indicator of business investment demand
  • Labour market trends → continued focus on economic cooling risks

 

Europe

  • Eurozone Consumer Confidence → signals household spending outlook
  • Growth and inflation trends remain central to ECB policy expectations
  • Economic activity data monitored for signs of recovery momentum

 

Asia-Pacific

  • Tokyo CPI → major driver of BoJ policy expectations and JPY direction
  • Yen weakness and intervention risks remain in focus
  • Australian credit growth → insight into domestic demand conditions
  • New Zealand business sentiment → indicator of economic recovery prospects

 

Global / Geopolitics

  • Middle East developments → impact on oil prices and inflation outlook
  • Energy market stability → influence on global growth expectations
  • US-China relations → ongoing source of market sensitivity
  • Central bank policy divergence → continued driver of FX market volatility
Currency Pair Mid-market Rate
AUD/USD 0.6893
AUD/NZD 1.2218
AUD/JPY 111.51
AUD/CNY 4.6961
AUD/EUR 0.6072
AUD/GBP 0.5237
AUD/HKD 5.4035

 

 

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