AUDUSD remains tight-lipped on RBA inaction, focus on US Retail Sales

Market players consolidate the week-start moves as the US Dollar picks up bids ahead of this week’s top-tier data/events, especially after the previous day’s upbeat data and hawkish comments from the Federal Reserve (Fed) officials. That said, the pre-data anxiety and pessimism surrounding China also allow the Greenback to resume upside after a downbeat start.

Given the US Dollar’s rebound, the EURUSD and GBPUSD remain on the back foot, especially amid a lack of major catalysts and the market’s doubts about the European Central Bank (ECB) and the Bank of England’s (BoE) hawkish bias. The USDJPY buyers, however, struggle to keep the reins after rising in the last three consecutive days on the hawkish rhetoric from the Bank of Japan (BoJ) Governor Kazuo Ueda.

AUDUSD remains lackluster as the Reserve Bank of Australia (RBA) keeps the monetary policy unchanged and tries to defend the hawks. Meanwhile, NZDUSD drops on the broad weakness in the commodity prices and the Antipodeans whereas USDCAD also snaps a two-day losing streak.

Crude oil retreats from a three-week high but the Gold price also lacks momentum as commodity traders seek more clues amid US Dollar recovery and a pause in the risk-negative headlines from the Middle East.

BTCUSD and ETHUSD dropped to the lowest level in a month as long liquidation among the crypto traders accelerated ahead of Spot ETH ETF approvals from the US SEC.

Following are the latest moves of the key assets:

• WTI Crude oil retreats from a three-week high to post the first daily loss in three, down 0.50% intraday near $79.50 by the press time.
• Gold remains side-lined around $2,320 after posting mild losses the previous day.
• The USD Index picks up bids to reverse the previous day’s retreat from a six-week, mildly bid near 105.40 at the latest.
• Wall Street closed with minor gains and so did the Asia-Pacific shares. On the same line, equities in British and Europe remain slightly firmer during the initial trading hour.
• BTCUSD and ETHUSD both remain depressed at a monthly low, down more than 1.0% to $65,600 and $3,450 respectively as we write.

US Dollar recovers ahead of key data…

US Dollar picks up bids to reverse Monday’s losses as traders prepare for US Retail Sales and Industrial Production for May. Also allowing the Greenback to rise are the hawkish Fed talks backed by the upbeat US data and traders’ preference for the US currency ahead of the Juneteenth holiday. That said, the US Empire State Manufacturing Index for June marked a four-month high the previous day. Also, Philadelphia Fed President Patrick Harker said, “I think one cut is appropriate but could change depending on data.”

The US Dollar’s rebound weighs on the EURUSD and GBPUSD despite the European Central Bank (ECB) and the Bank of England (BoE) officials’ hesitance to signal rate cuts.

Meanwhile, USDJPY fails to justify the US Dollar’s run-up as Bank of Japan (BoJ) Governor Kazuo Ueda cited chances of raising interest rates again in July after taking a bold move in March. Also exerting downside pressure on the Yen pair could be the lackluster yields and dicey markets.

Elsewhere, the Reserve Bank of Australia’s (RBA) hawkish halt allows the AUDUSD pair to remain side-lined. The Aussie central bank cites economic uncertainty and a rocky process to reach the inflation target while keeping the benchmark interest rate unchanged at 4.35% early Tuesday. It should be noted, however, that the mixed concerns about China, Australia’s biggest customer, join hopes of witnessing the RBA’s further rate cuts to keep the pair sellers hopeful.

Unlike AUDUSD, the NZDUSD pair marks the biggest fall among the G10 currency pairs as the US Dollar reverses the week-start losses ahead of top-tier data/events, especially amid China pessimism. On the same line, USDCAD snaps a two-day losing streak as the Greenback’s run-up joins a pullback in crude oil prices from a three-week high. That said, crude oil is Canada’s key export item and is presently declining for the first time in three days as optimism surrounding the demand-supply matrix fades amid the hawkish Fed concerns and doubts about China’s economic transition.

While Crude Oil remains on the back foot, the Gold price seesaws within a weekly trading range, picking up bids of late, amid dicey markets. It should be observed that the US Treasury bond yields’ struggle to regain upside momentum joins the market’s uncertainty about the major central banks’ rate actions and upbeat performance of equities to put a floor under the precious metal prices of late.

• Strong buy: USDCAD, USDJPY, US Dollar, Silver
• Strong sell: AUDUSD, NZDUSD, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold, DJI30, USDCNH
• Sell: DAX, FTSE 100, EURUSD, Crude Oil

US Retail Sales, Industrial Production and Fed talks eyed ahead of Juneteenth…

Looking ahead, the US Dollar’s recovery now hinges on this week’s key data, as well as Fed talks, ahead of Wednesday’s holiday for Juneteenth. Also important to watch will be the final readings of Eurozone inflation for May and ZEW Survey data for June. With this, the traders are likely to witness an active day and could help the US Dollar to extend the latest run-up should the scheduled data/events suggest fewer rate cuts from the Fed. It should be observed that the current notion in the market suggests one rate cut by the US central bank in 2024, which in turn falls beneath the previous bias of witnessing more such actions and underpin the US Dollar strength.

May the trading luck be with you!