Aussie dollar continues to trade above US$0.66
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Daily Currency Update
The Australian dollar is slightly stronger this morning when valued against the Greenback currently trading at 0.6670 at the time of writing. Friday's session recorded a significant uplift in the Australian dollar (AUD) against the US dollar following an unexpected inflation reduction in the US in May. On the data front last week Australia’s monthly inflation rate increased to its highest level in 2024 in the latest indication that the Reserve Bank won’t be cutting interest rates soon and might yet hike again. Consumer prices rose 4% last month from a year earlier, the Australian Bureau of Statistics said on Wednesday. That compared with the 3.6% pace recorded for April, and the 3.8% rate expected for May by economists. The jump in May’s inflation was partly propelled by automotive fuel prices, which were up 9.3% from a year earlier even as they retreated 5.1% during the month itself. Electricity prices were also up 6.5% from a year ago, quickening from April’s 4.2% pace. Without the federal and state rebates, power prices would have been 14.5% higher. Looking ahead this week and today we will see the release of the monthly ANZ Job Advertisements. On Tuesday the Reserve Bank of Australia will release the Monetary Policy Meeting Minutes a detailed record of the RBA Reserve Bank Board's most recent meeting, providing in-depth insights into the economic conditions that influenced their decision on where to set interest rates. Finally, on Wednesday the Australian Bureau of Statistics will release the monthly Retail Sales Figures.Key Movers
In the US on Friday U.S. monthly inflation was unchanged in May as a modest increase in the cost of services was offset by the largest drop in goods prices in six months, drawing the Federal Reserve closer to start cutting interest rates later this year. May’s Personal Consumption Expenditures (PCE) showed headline inflation softens to 2.6% YoY, down from the previous month’s 2.7%. Core PCE (which excludes volatile food and energy prices) has also experienced a decline to 2.6% from the previous 2.8% in April. Financial markets saw a roughly 68% chance that the Fed's policy easing would start in September compared to about 64% before the data, though policymakers recently adopted a more hawkish outlook. The U.S. central bank has maintained its benchmark overnight interest rate in the current 5.25%-5.50% range since last July. At the time of writing, the US dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls to 105.80.Expected Ranges
- AUD/USD: 0.6600 - 0.6800 ▼
- AUD/EUR: 0.6100 - 0.6300 ▼
- GBP/AUD: 1.8800 - 1.9000 ▲
- AUD/NZD: 1.0800 - 1.1000 ▲
- AUD/CAD: 0.9000 - 0.9200 ▲