AUD: Asia Wrap - AUD/USD Consolidates Back Above 0.6500
The AUD/USD has had a range of 0.6517 - 0.6532 in the Asia- Pac session, it is currently trading around 0.6530, +0.02%. US equities roared higher as the market gets ready for more rate cuts, the slight reprieve for the USD going into the print was quickly reversed. The more cuts being priced in increases the pressure on an already bearish USD market. I felt the bounce back towards 0.6550 offered a good risk/reward to fade initially but if the US starts pricing in more aggressive cuts can the AUD ignore it? The Price remains firmly in the 0.6350-0.6650 range, if the USD extends lower can it test the top end?
- MNI AUSTRALIA: Consensus Expects Some Normalisation In July Labour Data. With May and June employment gains disappointing, the July data will be monitored closely for signs that the labour market has turned. Q2 employment averaged 28.8k/month up from Q1’s 1.4k but slightly lower than Q2 2024’s 32.2k. Bloomberg consensus expects a 25k gain in July after June’s +2k, slightly below the Q2 average. The unemployment rate is forecast to decline 0.1pp to 4.2%, returning to the Q2 average.
- MNI AU DATA: Public Pay Growth Outpacing Private Sector. The Q2 WPI rose 0.8% q/q leaving annual inflation at 3.4% y/y after a recent trough at 3.2% in Q4 2024 and 4.1% in Q2 2024. Public sector quarterly wage gains outpaced the private sector for the third consecutive quarter at 1.0% q/q compared with 0.8%. Public wage growth is now up 0.1pp to 3.7% y/y, while private was 3.4% y/y. The RBA had forecast 3.3% for Q2 and in its August projections is expecting the WPI to trend lower to around 3% by Q2 2026. 2025 to date is showing some stabilisation in wage inflation.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6575(AUD746m), 0.6550(AUD597m). Upcoming Close Strikes : 0.6600(AUD1.25b Aug 14), 0.6690(AUD583m Aug 14), 0.6523(AUD562m Aug15) - BBG
- AUD/JPY - Asia-Pac range 96.40 - 96.70, Asia is trading around 96.70. The pair has bounced and is testing its first resistance around the 96.50/97.00 area. There should be sellers around here initially, but a break above 97.50 though would negate this and reinstate the momentum higher.
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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ASIA STOCKS: Equity Flows Ended Last Week Positively, Taiwan The Standout
Asia Pac equity inflow momentum was mostly positive into the end of last week. South Korea and Taiwan remained the standouts, see the table below.
- Taiwan has seen just over $1bn in net inflows over the past 5 trading sessions. South Korea trailed slightly, at just above $700mn. The early impetus for South Korean markets today is modest outflow pressures, as US equity futures track weaker in response to Trump's 30% tariff threat against the EU and Mexico (made over the weekend).
- Markets remain hopeful that lower tariff rates can be negotiated ahead of the Aug 1 deadline. Earnings, particularly in the tech space will be the other focus point.
- Elsewhere inflow momentum was positive into Indian markets, as YTD outflows continue to be scaled back.
- A positive end to the week for Thailand was also evident.
Table 1: Asian Markets Net Equity Flows
| Yesterday | Past 5 Trading Days | 2025 To Date | |
| South Korea (USDmn) | 274 | 711 | -8578 |
| Taiwan (USDmn) | 615 | 1073 | -1915 |
| India (USDmn)* | 98 | 614 | -7805 |
| Indonesia (USDmn) | 28 | -115 | -3502 |
| Thailand (USDmn) | 68 | 90 | -2366 |
| Malaysia (USDmn) | -24 | -122 | -2793 |
| Philippines (USDmn) | 1 | -14 | -562 |
| Total (USDmn) | 1060 | 2237 | -27520 |
| * Data Up To July 10 |
Source: Bloomberg Finance L.P./MNI
US TSYS: Asia Wrap - Quiet Session For US Bonds
The TYU5 range has been 110-24+ to 110-28 during the Asia-Pacific session. It last changed hands at 110-27, up 0-04 from the previous close.
- The US 2-year yield has edged lower trading around 3.88%
- The US 10-year yield has edged higher trading around 4.413%.
- The 10-year yield is again testing the 4.40/45% pivot within its wider 4.10% - 4.65% range. The market is clearly worried about inflation and the CPI this week will be a critical input into the market's thinking. A sustained close back above the 4.45% area could see more longs pared back, above here and the focus will turn back to the 4.60% area.
- Nick Timiraos on X: “Penn’s Peter Conti-Brown: “We are in a high-stakes moment in the history of the Federal Reserve. It seems clear to me that the Trump administration, using various mechanisms, [has] now cooked up a post-hoc explanation for Powell’s removal.”
- "TRUMP: IF POWELL TO STEP DOWN WOULD BE A GOOD THING" - BBG
- MNI BRIEF: US Budget Surplus $27B In June; YTD Deficit $1.3T. The U.S. government posted a USD27 billion budget surplus for June, up USD98 billion from a year earlier, reflecting strong tax receipts and collections of import duties, the Treasury Department said Monday.
Fig 1: 10-Year US Yield Hourly Chart
Source: MNI - Market News/Bloomberg Finance L.P
GOLD: Steady Today After Friday Strong Gain
Gold is little changed in today’s Asia-Pac session, after closing ~1% higher at $3355.59 on Friday.
- This came despite US tsys finishing Friday’s session with a bear-steepener. Higher rates are typically negative for gold, which doesn’t pay interest. Cash US tsys are slightly mixed in today's Asia-Pac session, with yields 1bp lower to 1bp higher.
- (Bloomberg) – “Gold has a raft of supportive drivers, from central-bank buying and investor inflows into exchange-traded funds to concerns about the trade war and, separately, the US fiscal outlook.”
- “Central banks and other institutions accumulated about 77 tons of gold on average each month from January through to May, according to Goldman Sachs Group Inc., which maintained forecasts for bullion to rally to fresh records in the coming quarters.”
- Mounting pressure on Federal Reserve Chair Jerome Powell continues, with President Donald Trump criticising his monetary policy approach as overly restrictive.
