AUD: Asia Wrap - AUD/USD Has A Look Above 0.6600

The AUD/USD has had a range of 0.6454 - 0.6497 in the Asia- Pac session, it is currently trading around 0.6490. The AUD has remained better bid throughout the Asian session, +0.45%. The market is shrugging off headlines of explosions and missiles still heading in either direction and focusing wholly on the ceasefire announced by President Trump. The market was very quick to re-sell USD’s across the board and now the AUD is back within striking distance of 0.6550 again.

• "TRUMP SPOKE DIRECTLY WITH NETANYAHU ON CEASEFIRE AGREEMENT, TRUMP THANKS QATAR EMIR FOR HELPING BROKER ISRAEL-IRAN TRUCE"
• “Oil extended declines and US futures gained after Donald Trump said that Israel and Iran had agreed to a tentative ceasefire. Iran’s foreign minister said no agreement has been made but that it would halt fighting if Israel stops.”(BBG)
• From looking vulnerable and on the verge of a collapse, down around 1.2% at one point then ending positive on the day is quite the feat.
• The AUD/USD bounced hard off its support and is now back to potentially testing the top end of its range.
• Price remains in the wider 0.6350 - 0.6550 range for now. After failing to break lower and risk looking like it can extend higher can the AUD have another go trying to break above the 0.6550 area ?
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.6500(AUD1.41b June 26), 0.6450(AUD553m June 26).
• CFTC Data shows Asset managers maintaining their shorts, the Leveraged community though again added to their shorts.
• AUD/JPY - Today's range 94.26 - 94.56, it is trading currently around 94.35. Choppy price action as the pair establishes a range between 92.00 - 96.00. Should risk build on this move, focus could turn back to the 96.00 area.

Fig 1: AUD/USD spot Daily Chart

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

The TYU5 range has been 111-06 to 111.10+ during the Asia-Pacific session. It last changed hands at 111-09+, down 0-05 from the previous close.

• The US 2-year yield has edged lower trading around 3.85%, down 0.01 from its close.
• The US 10-year yield has edged lower trading around 4.34%,  down 0.01 from its close.
• (Bloomberg) -- “There's also the likelihood that bonds need to hear a dovish tone from Fed Chair Powell before they can make serious gains. Powell’s two days of Congressional testimony starts in the US session later today and he will be grilled about the potential for interest-rate cuts as soon as July”
• Bob Elliott on X: “A Broad Slowdown In US Hard Data. In recent weeks hard data across nearly every sector of the US economy has shown slowing, suggesting a broad-based weakness that is far from priced into current market expectations.”
• The 10-year yield attempted to break below its 4.30% support overnight, it failed on its first attempt but a sustained move back below there would likely see the move pick up momentum. 10-year yields would need to get back above 4.45/4.50% again to alleviate this downward pressure.
• Data/Events: Philadelphia Fed Non-Man Activity, Current Account Balance, FHFA House Price Index

The 20-year JGB auction delivered mixed results across key metrics. The low price underperformed dealer forecasts, which were set at 100.50 according to a Bloomberg poll. However, the cover ratio increased to 3.1007x (highest since March) from 2.5007x in the previous auction, and the auction tail shortened dramatically to 0.28 from 1.14 – the longest since 1987. 

• As noted in the auction preview, today’s offering featured an outright yield approximately 10bps below last month’s level and 25bps below the cycle high.  
• However, the 10/20 yield curve remained near its recent high, its steepest since 1999.
• Overall, today’s result is likely to be seen as better than the performance observed in the 30-year JGB auction earlier this month.
• Post-auction, the 20-year JGB has cheapened 1bp.