Markets remained in consolidation mode ahead of Thursday’s US inflation report. The S&P500 is up 0.1%, near the all-time high, although bond yields are slightly lower, and the defensive US dollar is slightly higher. US 2yr treasury yields slipped from 0.16% to 0.15%, while the 10yr yield fell from 1.56% to 1.52% - a one-month low. 10yr break-even inflation fell back to April levels at 2.37%.Australian 3yr government bond yields (futures) slipped from 0.21% to 0.19%, while the 10yr yield fell from 1.58% to 1.51%.
Commodities, Brent crude oil futures rose 1.2% to $72.34, copper rose 0.5%, and gold fell 0.4%, while iron ore rose 3.9% to $209.80.
Overnight Currency Ranges
AUD/USD 0.7732 0.7763
EUR/USD 1.2164 1.2194
GBP/USD 1.4121 1.4182
USD/JPY 109.20 109.56
NZD/USD 0.7188 0.7232
USD/CAD 1.2071 1.2118
USD/CNH 6.3855 6.4015
AUD/JPY 84.65 84.85
AUD/NZD 1.0727 1.0759
AUD/USD traded in a tight 0.7732/0.7763 range yesterday with offering interest still expected ahead of 0.7815 while downside support remains ahead of 0.7700 and again at 0.7650.
Event Risk Data Today
Australia: The June Westpac-MI Consumer Sentiment survey is in the field over the week to June 8. The major development this month is Vic's move into a 14-day lockdown following a spate of COVID cases. The scale of the hit to Vic consumers and the degree of spill-over to sentiment inter-state will be of key interest. Other factors are likely to remain strongly supportive with housing markets booming and the ASX posting a strong rally, although labour market indicators have been a little more mixed in recent weeks, suggesting some fallout from the end of JobKeeper. The RBA’s Kent (Assistant Governor, Financial Markets) will speak at the KangaNews Debt Capital Markets Summit, 9.30 AEST. Following this, Weekly Payroll Jobs and Wages for the week ended May 22 will be published. This release will provide a lead on the possible outcome of the May labour force survey.
New Zealand: The initial release of the June ANZBO business survey will let us see if the strong trend in economic data has continued. Despite the Budget not containing much additional support directly for businesses, this is the first chance we’ll get to see how businesses think they will be impacted changes in government policy. We also will have Q1 manufacturing activity, which will feed into updated Q1 GDP estimates.
China: The May CPI (market f/c: 1.6%yr) and PPI (market f/c: 8.5%yr) will continue to show a spike in through-the-year prices on base effects. Meanwhile, the M2 money supply should hold around 8.1% while new loans are set to expand a further CNY 1400bn.