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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
AUD
The A$ is comfortably outperforming in the G10 space post the monthly CPI beat. AUD/USD last tracks near 0.6675 just off session highs (0.6679). We are up around 0.45% so far for the session.
- Other currencies are close to unchanged against the USD at this stage. For AUD/USD, upside focus will rest on a potential upside test of 0.6700. Note May 16 highs came in at 0.6714.
- Forward looking AU-US policy rate differentials are back in positive territory (the 3 month spread in 1yr's time around +12bps), see the chart below. This is highs back to Feb of this year. Still, there is not a large disconnect with the AUD/USD relative to recent history of the two series.
- AUD/JPY sits just off fresh cycle highs, last in the 106.65/70 region. We touched 106.77 earlier. This is highs in the pair back to 2007.
- The AUD/NZD cross is also rallying, back above 1.0900.
- Outside of the post CPI move, the recovery in regional risk appetite in terms of equity sentiment is also likely helping the AUD at the margins.
Fig 1: AUD/USD Versus AU-US Monetary Policy Expectations
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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