AUD: AUD/USD - Drifts Higher In A Quiet Session

The AUD/USD has had a range of 0.6502 - 0.6530 in the Asia- Pac session, it is currently trading around 0.6528. The AUD has again found demand back towards the 0.6500 area as it eyes testing above the 0.6550 area. Stocks have performed well in the Asian session and the AUD continues to benefit from this.

• AUSTRALIA DATA: May NAB Business Labour Costs Fastest Since January. NAB business price/cost components in May were mixed containing elements of concern and optimism. The pickup in labour costs in addition to signs that wage growth is rising again are likely to be monitored closely. The employment component of the survey though was very weak which may pressure pay gains.
• AUSTRALIA DATA: Westpac's measure of consumer confidence rose 0.5% in June to 92.6 after May's 2.2% increase boosted by 50bp of RBA easing this year and lower inflation. The index is at its highest since January but still 1.8% below that level as global events have weighed on sentiment.
• Price in the 0.6350 - 0.6550 range for now, a sustained break above 0.6550 is needed for the move higher to accelerate. Price looks set to test the top end of the range but I am not sure how far it extends until we get US CPI tomorrow out the way.
• Expect buyers to continue to be around on dips while the support in the AUD 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: 0.64200(AUD771m)/ 0.6460(AUD 529m). Upcoming Close Strikes : 0.6350(AUD 711m June 12), 0.6600(AUD643m June 12)
• CFTC Data shows Asset managers maintaining their shorts, the Leveraged community though continued to add to their shorts once more.

• AUD/JPY - Today's range 94.15 - 94.59, it is trading currently around 94.58. Price broke the multiple tops around the 94.00 area over NFP’s. It has since managed to hold these gains, while this continues focus will turn to the high towards 96.00. Support should now be back towards the 93.00/50 area.

  Fig 1: AUD/USD spot Daily Chart

  

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

The TYU5 range has been 110-02 to 110-07 during the Asia-Pacific session. It last changed hands at 110-04, down 0-01 from the previous close.

• The US 2-year yield is unchanged, dealing around 4.0075%.
• The US 10-year yield has edged higher, trading around 4.48%, up 0.1 from its close.
• Bloomberg - “Negotiations in London wrapped on Monday with an extension of the talks into a second day, offering little lifeline to the struggling greenback. US Commerce Secretary Howard Lutnick called the discussions “fruitful,” while Treasury Secretary Scott Bessent described it as a “good meeting.”
• Bloomberg - “Senator Ted Cruz has proposed eliminating the interest paid to banks that deposit cash at the Federal Reserve, which could save the government around $1 trillion over a decade.”
• “JPMorgan strategists warn that this move could significantly impact banks' profitability, liquidity management strategies, and short-term interest rates, and risk the Fed losing control of money market rates.”
• The 10-year yield held its support around the 4.35% area last week. While this level holds focus will remain on potentially extending higher, CPI tomorrow will be a very important input.
• Data/Events: NFIB Small Business Optimism 

RBA-dated OIS pricing is mildly firmer across meetings today. 

• Nevertheless, pricing is 12-24bps softer than pre-RBA (May Meeting) levels.
• A 25bp rate cut in July is given an 82% probability, with a cumulative 73bps of easing priced by year-end.

Figure 1: RBA-Dated OIS – Current Vs. Pre-RBA Level

Source: Bloomberg Finance LP / MNI