17th June 2021 -AUD/USD extends Fed-led slump to two-month low, RBA’s Lowe, Aussie jobs key today


Good Morning,


Market Headlines

The Federal Reserve’s FOMC meeting statement surprised markets by showing a majority of members expected rate hikes by 2023. US equities fell (S&P500 currently -0.5%), while bond yields and the US dollar jumped, causing a sharp fall in the AUD and NZD. The US dollar index is up 0.7% on the day, and at a six-week high, the USD outperforming all the majors. EUR fell from 1.2125 to 1.2009 – the lowest since early May. USD/JPY rose from 109.81 to 110.52 – a three-month high. AUD fell from 0.7716 to 0.7609 – a two-month low. NZD fell from 0.7155 to 0.7048 – a two-month low. AUD/NZD fluctuated following the FOMC, between 1.0782 and 1.0804.


US 2yr treasury yields rose from 0.16% to 0.21% in response to the FOMC statement, while the 10yr yield rose from 1.48% to 1.59% and is currently at 1.56%. Australian 3yr government bond yields (futures) rose from 0.35% to 0.39% (well above yesterday’s 0.15% due to the change of front futures contract), while the 10yr yield rose from 1.55% to 1.62%.


Commodities, Brent crude oil futures rose 0.2% to $74 – the highest since April 2019, copper fell 0.5%, and gold fell 1.0%, while iron ore fell 3.2% to $214.


Overnight Currency Ranges

AUD/USD 0.7607 0.7715

EUR/USD 1.1994 1.2134

GBP/USD 1.3983 1.4132

USD/JPY 109.80 110.72

NZD/USD 0.7043 0.7155

USD/CAD 1.2158 1.2280

USD/CNH 6.3904 6.4422

AUD/JPY 84.07 84.75

AUD/NZD 1.0768 1.0802


AUD Thoughts

Today’s jobs data for May and RBA Governor Lowe’s speech are key. Governor Lowe’s speech is titled From Recovery to Expansion and comes ahead of the important July Board meeting at which decisions will be rubber stamped on the bond yield target and QE programme.


Looking for bids in the 0.7580/0.7600 to provide some support in the short term for AUD/USD. Offers from 0.7680 as the range ratchets lower.


Event Risk Data Today

Australia: The May jobs report is expected to show employment rose by 30k.Markets also expect the unemployment rate will rise from 5.5% to 5.7% due to a rebound in participation. RBA Governor Lowe gives a speech on “From Recovery to Expansion” at 10am in Toowoomba, Queensland.


New Zealand: Markets expect a 0.6% rise in GDP for the March quarter, following a fall of 1.0% in December. While the absence of international tourism is likely to continue disrupting the seasonal patterns in the data, the domestic economy continues to be supported by a strong housing market which many sectors have benefitted from.


Eurozone: CPI inflation in May is expected to be finalised at a 0.3%m/m, 2.0%y/y pace.

Recent Posts

See All

Disclaimer

This material is provided by Navigate Global Payments (Navigate) ACN 615 699 888, AFSL 502711.  The material contains general commentary only and does not constitute investment or any other advice.  Certain types of transactions, like futures, options and high yield securities can be risky, and not suitable for all investors.  This information has been prepared without considering your objectives, financial situation or needs.  Please seek your own independent legal or financial advice before proceeding with any investment decision.  The information is believed to be accurate at the time of compilation and is provided in good faith.  Navigate does not warrant the accuracy or completeness of any information contributed by a third party. The information is subject to change without notice and Navigate is under no obligation to update the information. The information contained in this material are opinions of the author at the time of writing and does not constitute an offer, recommendation to act, a solicitation of an offer, or an inducement to subscribe for, purchase or sell any financial instrument or to enter a legally binding contract.  This information, including any assumptions and conclusions is not intended to be a comprehensive statement of relevant practise or law that is often complex and can change.  Past performance is not a reliable indicator of future performance. Any forecasts given in this material are predictive in character.Navigate Global Payments Pty Ltd nor its related parties or officers accepts no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the information contained or related to this site.