Risk appetite booms after Fed, PBOC
Financial markets were strongly higher overnight as markets reacted to the US Federal Reserve’s decision to pause its rate-hiking cycle while a rate cut from the People’s Bank of China also boosted sentiment.
In the US, the S&P 500 and Nasdaq both jumped 1.2%.
The Australian dollar was the best performing currency overnight with the AUD/USD up 1.4% as it reached the highest level since February.
The Aussie was helped by the better-than-expected reading from the Australian jobs market after 75.9k new jobs were added in May. The market had forecast only 15k.
Euro stronger after ECB
In Europe, the euro jumped after the European Central Bank lifted its main refinancing rates by 25 basis points to 4.00%.
The ECB signalled it expected further rate hikes with the bank’s inflation forecasts raised to 5.40% for year-end.
The EUR/USD surged with the pair up 1.1%.
JPY struggles ahead of BoJ
Global markets were also helped by news the People’s Bank of China had cut its one-year medium-term lending facility from 2.75% to 2.65%.
The news saw regional equities and commodities higher, with the recent rally in iron ore continuing to provide support to the AUD.
The focus now turns to the Japanese yen with the currency significantly pressured as the Bank of Japan remains the only major G10 currency not to have lifted rates.
The BoJ meets today but is widely expected keep policy broadly in place after the last meeting saw new BoJ governor Kazuo Ueda announce an 18-month review into the bank’s policy processes.
Aussie, euro surge post Fed
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 12 – 17 June
All times AEST
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*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.
