17th June 2020 - Fed-led optimism initially favoured the pair on Tuesday, USD recovery trimmed gains


Market Headlines

Markets were initially buoyed overnight with relatively strong US retail sales data and reinforced support from Fed Chair Powell despite a deteriorating virus situation in China and some parts of the US. US equity markets were higher overnight with the S&P500 having gained 1.6%, but risky currencies are slightly lower and bond yields are little changed. Brent futures rose 2.5% to $40.70, copper fell 0.2%, iron ore rose 1.8% to $104.85, and gold rose 0.1%.


Currencies

The US dollar index rose by 0.3% on the day.

EUR dropped from 1.1353 to 1.1228.

USD/JPY ranged between 107.20 and 107.60.

AUD initially dropped from 0.6950 to 0.6834, settling at 0.6880 this morning.

NZD slipped from 0.6480 to 0.6412.

AUD/NZD fell from 1.0720 to 1.0656.


AUD Thoughts

- AUD/USD eases from 0.6880 still carrying the late-US session recovery from 0.6833.

- Fed-led optimism initially favoured the pair on Tuesday, USD recovery trimmed gains afterward.

- News of Beijing’s lock-down, RBA minutes failed to get major audience.

- Aussie Westpac Leading Index, risk catalysts worth watching for immediate direction.


The Asian economic calendar carries fewer data/events to watch except for Australia’s Westpac Leading Index for May, prior -1.5%. As a result, qualitative catalysts may keep dominating the markets. In doing so, US Secretary of State’s visit to the Chinese diplomats in Hawaii as well as virus updates from Beijing may gain major attention ahead of the US session.


The pair’s failure to break the mid-January top surrounding 0.6965 gets strongly supported by 0.6840/35 horizontal area. However, the buyers remain optimistic unless witnessing a daily closing below an ascending trend line from April 03, at 0.6695 now.


Event Risk Data Today

Australia: The Westpac-MI Leading Index May reading is likely to see a further


Europe/UK: Inflation will remain absent in both the Euro area and UK in May.


Canada: May CPI is likely to be weak given expectations of a 40% contraction in economic growth.


Japan: May Trade Balance


US: Housing Starts and Permits for May, FED Chair Powell will complete two days of testimony in Washington (02:00 AEST) and Mester (06:00 AEST) will also speak.

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