Early Tuesday, the Australian Dollar (AUD) maintained its strength against major currencies as markets absorbed the Reserve Bank of Australia‘s (RBA) recent policy announcements and remarks from Governor Michele Bullock. In Europe, economic data will focus on the ZEW Survey for Germany and the Eurozone, while later in the day, US Retail Sales and Industrial Production figures will be closely monitored by investors.
Following its June policy meeting, the RBA decided to keep the Official Cash Rate (OCR) steady at 4.35%, aligning with market expectations. The RBA acknowledged that while inflation is easing, it is doing so at a slower pace than anticipated and remains high. The central bank indicated that it might take some time before inflation returns to the target range. During the post-meeting press conference, Governor Bullock mentioned that policymakers debated a rate hike and emphasized their vigilance regarding upside risks to inflation. In response, AUD/USD rose by 0.3% to 0.6630.
The US Dollar (USD) experienced a bullish start to the week but faced diminished demand later on Monday. As major Wall Street indexes climbed after the opening bell, the USD Index declined, closing in negative territory. Early Tuesday, US stock index futures showed slight gains, with the USD Index trading in a narrow range below 105.50. Meanwhile, the 10-year US Treasury bond yield remained steady just under 4.3% after a significant rise on Monday.
In Japan, Bank of Japan (BoJ) Governor Kazuo Ueda suggested on Tuesday that the central bank might consider raising interest rates at the July meeting, contingent on economic, price, and financial data at the time. Despite these comments, the Japanese Yen saw little benefit, with USD/JPY trading positively around 158.00.
EUR/USD capitalized on USD weakness, posting modest gains on Monday and remaining in a consolidation phase slightly below 1.0750 on Tuesday morning. Similarly, GBP/USD recovered from Friday’s sharp decline, moving within a narrow range around 1.2700 early Tuesday.
Gold, pressured by rising US Treasury bond yields, closed lower on Monday. XAU/USD remained steady near $2,320 in the European morning.
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