Greenback gains as US shares fall
Global markets were mostly lower overnight as the US and Iran continued to exchange fire, while a looming major speech from US President Donald Trump also kept markets on tenterhooks.
US Central Command confirmed a sixth straight day of strikes on Iran.
Meanwhile, President Trump speaks at 11.00am AEST in a speech that could cover geopolitics, although the focus might be on the election integrity SAVE Act, which has stalled in Congress.
US shares were lower. The S&P 500 fell 0.5%, while the tech-focused Nasdaq lost 1.5%.
In FX, the US dollar gained. The euro and British pound led losses.
AUD/USD and NZD/USD lost 0.1%. USD/JPY gained 0.1%. USD/SGD and USD/CNH both climbed 0.1%.
Cooling inflation weighs on AUD/USD
Australian consumer inflation expectations fell 0.8 percentage points to 4.7% in July, the lowest level since January, according to the Melbourne Institute.
The survey also showed the trimmed mean inflation expectations easing for a third straight month after April’s jump, while wage expectations have remained steady for eight consecutive months. Markets are currently pricing in only a small chance of an RBA rate increase at its August meeting.
AUD/USD eased from one-month highs overnight. Looking forward, near-term resistance is located at 0.7100. On the downside, the 21-day EMA at 0.6969 is the next key support level, followed by 0.6950.
Elsewhere, AUD/JPY has climbed to a one-month high and is less than 1.0% from multi-decade highs.
China trade doubts keep USD/CNH in focus
US officials increasingly believe China is not meeting Washington’s interpretation of the trade agreement, according to Bloomberg. However, the Trump administration appears reluctant to publicly challenge Beijing as it seeks to avoid reigniting trade tensions. Some officials also worry that a tougher stance could complicate plans for a potential state visit by President Xi Jinping.
Ahead of an upcoming US-China meeting, rare earth exports are expected to feature prominently. While some policymakers want to press China on perceived breaches, others fear Beijing may be testing the limits of US tolerance.
Expect more FX volatility ahead.
USD/CNH remains near a three-year low. A move above the 21-day EMA at 6.7856 could open the door to the 50-day EMA at 6.7959. Support is seen at the key psychological level of 6.7600.
USD highs ahead of Trump speech
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: July 13-17
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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.
