AUD/USD rose from 0.77 to just below 0.79 in the second week of May. Apart from this, the pair essentially jostled up and down around $0.77 for most of the month. In June, the aussie is expected to hover from the upper-0.76 mark to the lower-0.78 level, according to economists at Mizuho Bank.
China is restricting imports from Australia
“In June, AUD/USD will be supported by improved Australian fundamentals and the RBNZ’s monetary policy outlook. However, it will be swayed by temporary iron ore price movements and rising US long-term interest rates. As such, it will probably move around a range from the upper-$0.76 mark to the lower-0.78 level. The pair’s movements will also reflect market expectations in the run-up to RBA’s board meeting in July.”
“NZ finance minister Grant Robertson said the labor market outlook had improved and economic activity was moving strongly, with the long-term impact of covid likely to be less severe than originally thought. If NZ’s fundamentals remain strong, this will continue to support the Australian dollar’s movements too.”
“The US has posted upswings in the CPI data and the PCE deflator, for instance, so market inflationary expectations will be prone to volatility. Some FOMC members are predicting that subsequent meetings will start discussing moves to taper the pace of the FRB’s asset purchases. If some indicators emerge that would indeed justify the commencement of these talks at the June meeting, this will push US interest rates higher, with the AUD/USD pair moving with a heavy topside as a result.”
“If Beijing announces further restrictions on Australian imports, the Australian dollar could lose momentum, so investors should continue to monitor Chinese comments related to controlling commodity prices.”
“When the RBA’s board meets on July 6, it will discuss whether to extend its three-year yield target from April 2024 to November 2024. This decision will help to gauge when the RBA will start hiking rates again, so the markets will probably move skittishly towards the month’s end.”
