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Australian dollar jumps as US inflation tanks

Published 13/06/2024, 07:55 am

DXY fell last night:

AUD jumped. Breakout against EUR looks possible:

No help from North Asia and the CNY fix is the key driver of the AUD range trade:

Oil and gold rebounded:

Metals too:

And miners:

EM is holding support:

Junk firmed:

Bonds were bid:

Stocks whoa!

US inflation tumbled:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% in May. The 16% trimmed-mean Consumer Price Index increased 0.1%. “The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report”.

This was all the more impressive given the owner’s equivalent rent is still booming, up 0.4% on the month and 5.4%, whereas leading private surveys are far below:

US inflation appears cooked.

Which is amusing given that the Fed pivoted hawkishly!

Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. In recent months, there has been modest further progress toward the Committee’s 2 percent inflation objective.

The dots reduced 2024 easing to one cut:

As well as raising the terminal rate to 2.75%

Look for the reverse pivot soon. Rate cuts are coming.

AUD is now the meat in the Fed versus election sandwich. My best guess is that it will rise for now and then fall as we pass through H2.

But the 0.64-0.68 trading range is probably intact.

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