Greenback recovers after five-day losing streak
The Australian dollar eased from recent highs on Friday as market attention returned to the threat of US tariffs.
The 90-day pause on US tariffs ends on 9 July and while markets were strongly positive last week as tensions in the Middle East eased – this week might be a different story.
The shift in mood boosted the US dollar with the USD index up for the first time in six sessions.
Key FX markets eased from recent highs with the AUD/USD down 0.3% while NZD/USD was steady.
In Asia, the Singapore dollar and Chinese yuan both slipped, with the USD/SGD up 0.1% and USD/CNH also up 0.1%.
AUD on edge as tariffs loom
Minneapolis Fed President Neel Kashkari said Thursday the central bank may delay action as it waits for more clarity on how tariffs could impact inflation.
He noted that businesses might hold off on passing costs to consumers until they see where import duties ultimately land.
“We need to go slow until we better understand the effects of tariff-driven inflation,” Kashkari said. His cautious stance aligns more closely with Fed Chair Jerome Powell and contrasts with former President Trump’s repeated calls for interest rate cuts. Kashkari emphasized that the Fed’s decisions are rooted in data and analysis, not politics.
Meanwhile, the AUD/USD has just eased from seven-month highs.
Markets see a 96% chance of a rate cut at the Reserve Bank of Australia’s July meeting.
Key support levels for AUD/USD are at 21-day EMA of 0.6493 and 50-day EMA of 0.6449.
Factories, Fed & forecasts in focus this week
The upcoming week features a series of manufacturing PMI releases across major economies, providing insights into the health of the global manufacturing sector. Japan’s Tankan Large Manufacturing Index for Q2 is expected to decline to 9 from the previous 12.
Meanwhile, China’s official Manufacturing PMI for June is forecasted to remain in contraction territory at 49.7, with the Caixin China PMI expected at 49, slightly improving from 48.3. In Europe, final manufacturing PMI readings for June will be key data to watch. The US, will report the S&P Global US Manufacturing PMI on Wednesday. The UK will release its final Q1 GDP figures on Monday, with the QoQ growth rate last reading at 0.7% and YoY at 1.3%. Additionally, Germany’s preliminary CPI data for June will provide insights into inflation trends.
Inflation remains a key theme, with Germany, the Eurozone, and the US releasing critical data. Germany’s CPI for June will be reported on Monday. The Eurozone’s CPI data will also be closely watched. In the US, the Federal Reserve’s preferred inflation gauge, the ISM Manufacturing Prices Paid Index, will be released alongside the broader ISM Manufacturing PMI.
The US will release its June nonfarm payrolls report on Thursday, with expectations of a significant slowdown in job creation to 116k from the prior 139k. The unemployment rate is forecasted to tick up slightly to 4.3% from 4.2%. Additionally, the ADP Employment Change report for June will be reported too.
Australia’s May trade balance is expected to narrow slightly to A$5.046 billion from A$5.413 billion, while the US trade deficit for May is forecasted to widen to $67.2 billion from $61.6 billion.
USD climbs from three-year low
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 30 June – 4 July
Have a question? [email protected]
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
