US shares hit new 14-month highs
Global market sentiment started the new week strongly with big gains seen in US shares.
The S&P 500 gained 0.9% as it reached new 14-month highs while the Nasdaq jumped 1.8% to also reach the highest levels since April last year.
Financial markets are hopeful that tonight’s US inflation number will signal a slowdown in price pressures while Thursday’s morning’s Federal Reserve decision is seen as likely to keep rates on hold – US bond markets see a 75% chance of “no change” (source: Refinitiv).
Aussie higher, but Chinese yuan hit
The Australian dollar was the clear outperformer as the improvement in US shares boosted risk-sensitive markets like the AUD.
The AUD/USD gained 0.2%.
The Aussie also benefited as the impact of last week’s unexpected 25-basis point hike from the Reserve Bank of Australia provided support.
Otherwise, the US dollar was moderately higher, but the NZD/USD and USD/SGD remained broadly flat.
The Chinese yuan saw further losses, however, with the USD/CNH reaching the highest level since November last year.
US inflation in focus
US inflation is today’s major announcement with the result critical ahead of Thursday morning’s Federal Reserve decision.
Headline annual inflation is forecast to fall from 4.9% to 4.1%. However, the problem remains core inflation, which is forecast to fall from 5.5% to only 5.3% – and stubbornly above 5.0%.
Despite higher core inflation, the Fed is expected to hold rates steady on Thursday morning.
US inflation is due at 10.30pm AEST.
Otherwise, Australian business confidence, UK employment and German ZEW confidence make up a busy calendar in today’s FX market.
Aussie outperforms as RBA impact lingers
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.
