AUD: Asia Wrap - AUD/USD Drifts Back Above 0.6500 As The USD Recovery Stalls

The AUD/USD has had a range of 0.6469 - 0.6494 in the Asia- Pac session, it is currently trading around 0.6490. The AUD has drifted higher in a quiet Asian session +0.26%.

• AU Data - Westpac Lead Index Signals Slower Growth. The Westpac lead indicator fell 0.06% m/m in May after -0.01% but this resulted in the 6-month annualised rate falling to -0.08%, the weakest since September but importantly signalling that growth could ease to below trend over the second half of the year.
• (Bloomberg) -- “China is willing to enhance the level of trade and investment facilitation with Australia, Chinese Commerce Minister Wang Wentao says. China is willing to work with Australia to adhere to cooperation and openness, and not to engage in closed-door confrontation, Wang says.”
• The AUD failed miserably again to break above the 0.6550 area, with momentum stalling and the USD starting to bounce the probability of it moving to the bottom end of its range increases.
• Price remains in the 0.6350 - 0.6550 range for now, a sustained break above 0.6550/0.6600 is needed for the move higher to accelerate.
• Buyers should continue to be around on dips while the support in the AUD/USD holds, a close back below 0.6350 is needed to challenge the newly formed uptrend.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6400(AUD321m). Upcoming Close Strikes : 0.6600(AUD 1.1b June 19)

• AUD/JPY - Today's range 94.02 - 94.30, it is trading currently around 94.15.Choppy price action as the pair establishes a range between 92.00 - 96.00. A break back below 91.50/92.00 is needed to see the move lower regain momentum and the focus turn back to the year's lows again.

  Fig 1: AUD/USD spot Daily Chart

  

  Source: MNI - Market News/Bloomberg Finance L.P

The TYU5 range has been 110-23+ to 110.30 during the Asia-Pacific session. It last changed hands at 110-25, down 0-02 from the previous close.

• The US 2-year yield is unchanged; it is trading around 3.95%.
• The US 10-year yield edged higher, it is trading around 4.40%, up 0.01 from its close.
• MNI FED: FOMC Meeting Expectations: Patience Mostly Seen In New Projections. We expect that the June meeting communications will reflect an increasingly patient attitude since May and certainly since March’s projections
• (Bloomberg) -- “The report on possible easing of the US bank capital rule has so far seen muted market reaction in part because it falls short of expectations, according to National Australia Bank. “A general reduction in capital requirements is a lesser deal than a Treasury exemption,” says Ken Crompton, head of rates strategy at the Australian bank. The general lowering of the ratio is still theoretically supportive for Treasuries’ demand, but not as much as an exemption would be, says Crompton.”
• The 10-year yield bounced strongly off its 4.30/35% support, this area needs to hold if yields are to move higher. The range looks to be 4.30% - 4.60% for now a break either side would provide a clearer direction. Lots for the market to digest as things heat up in the middle east and we approach the FOMC.
• Data/Events: MBA Mortgage Applications, Housing starts, Initial Jobless Claims, FOMC

EXECUTIVE SUMMARY

• The BoJ decided to keep its policy rate unchanged at 0.50%, a move fully expected by markets and consensus economists. The decision was made by a unanimous 9-0 vote from the Monetary Policy Committee (MPC).
• The primary focus of the meeting was the pace of quantitative tightening (QT) beyond the near term. From the second quarter of 2026 through the first quarter of 2027, it will slow that pace to ¥200 billion per quarter, a decision backed by an 8-1 vote.
• The BoJ’s policy statement maintained its existing economic and inflation outlook, aside from technical changes to incorporate recent higher inflation prints.
• Importantly, Ueda stated that the BoJ may consider raising interest rates without needing to see clear-cut new signs of rising inflation, should the economic outlook and forecast trajectory warrant such action.
• Overall, the BoJ continues to signal a gradual, data-dependent approach to policy normalisation, balancing market stability, inflation developments, and global uncertainties as it proceeds with cautious tapering into 2026 and beyond.
• Full review here