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Greenback Trades On Surer Footing, AUD Extends Post-CPI Decline

FOREX
  • The USD index has risen 0.4% on Wednesday and price action remained supportive throughout the European session and across the first half of US trade. We note the potential link to value date month end flows, with the index putting in the top around the WMR fix.
  • AUD & NZD are among the session's poorest performers, both declining over 1%, after a lower-than-expected CPI print from Australia. Headline CPI slowed unexpectedly to 5.6% versus a 6.1% estimate - the lowest reading in just over a year. In response, traders marked down AUDUSD from ~0.6690 to ~0.6619 before stabilising through the European morning.
  • The broad greenback strength in the second half of the session saw AUDUSD extend declines, with the pair briefly breaching the 0.66 handle, the lowest level seen since June 05.
  • GBPUSD (-0.80%) also moved lower, picking up momentum through last week’s lows around 1.2685/90. Stagflationary concerns since last week’s BOE decision continue to temporarily weigh on sterling and it appears a short-term corrective technical cycle may be in play for the pair. Having breached initial support, the focus is on firm support at the 50-day EMA, at 1.2539.
  • Energy prices trade on the front foot, helping aide NOK toward the top-end of the G10 pile. A better-than-expected retail sales release has also helped, with May sales including auto fuel rising by 1.2% M/M vs. Exp. 0.2%. EUR/NOK reversed off a weekly high of 11.8537 in response.
  • A busy day in Sweden on Thursday is marked by a slew of economic data releases before the June policy rate decision. The Riksbank are expected to hike by 25bps, however there may be upside risks. Elsewhere on Thursday, second tier releases in the form of Australia and Japan retail sales precede the more significant German and Spanish CPI data.
Energy BulletsCommodities
Energy BulletsCommodities

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