Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
USD rebounds after recent losses
Global markets were sharply sold off overnight after the key US job openings and labor turnover series (JOLTS) came in well below expectations.
The number of job openings tumbled from 8.49m in April to 8.06m in May in another sign the US economy might be waning.
However, unlike recent days, in which US worries hit the greenback, overnight these growth concerns hit more risk-sensitive currencies like the Australian and NZ dollars.
The AUD/USD turned from the four-month highs at 0.6700 while the NZD/USD reversed at the three-month highs at 0.6200.
Looking forward, two big central banks will drive the overseas action over the next 48 hours. The Bank of Canada tonight, and European Central Bank tomorrow, with money market pricing looking for a rate cut from both central banks.
GDP due, but RBA key
The Aussie will be in focus today with March-quarter GDP due at 11.30am AEST. For now, Q1 GDP is tracking at a moderate 0.2% q-o-q and 1.1% y-o-y.
We project that private final demand was nearly unchanged, with flat private consumption, rising corporate investment but falling residential investment, and again another probable growth-promoting role for the public sector.
Trade data point to extremely robust import growth, but given the lackluster demand, we anticipate that this will primarily translate into higher stocks.
While the AUD/USD recently turned at key resistance, the Reserve Bank of Australia might support by keeping rates on hold for longer than comparable central banks.
Slight inflation rise, peso weakness persists
We anticipate that Philippines headline CPI inflation will slightly increase from 3.8% in April to 4.0% in May due to increased electricity and rice costs, somewhat offsetting reduced retail gasoline prices.
Furthermore, consistent core inflation of 3.2% is what we anticipate, contingent on demand.
The Philippines peso has been among the weakest currencies, due to the continuing significant trade imbalance and the growing demand for foreign exchange reserves.
USD index rebounds from three-month lows
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 3 – 7 June
All times AEST
*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.
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