AUD/USD Weekly Outlook: GDP, NFP On Tap

View related analysis:

Australia’s retail trade slipped -0.1% in May according to the ABS, in further signs that the economy is slowing. It will be interesting to see if household spending contracts further when April’s data is released on Thursday, given it fell -0.3% in March. ANZ also reported that job adverts contracted for a second consecutive month in May, which points towards a slowing jobs market. On Tuesday we’ll see company profits and net exports contribution to GDP, which could help refine last-minute calls on Wedensday’s Q1 growth figures.

Australia’s GDP is forecast to have risen 1.5% y/y in Q1 and 0.4% q/q. Anything less simply bolsters bets of a July cut. RBA cash rate futures currently imply a 73% chance of a July cut and an end-of-year cash rate of 3.1%.

The RBA minutes are released on are unlikely to shed any new light of the prospects of a July cut given events this week. Odds of another 25bp cut on July 8 have fallen to 59% from 78% ahead of the monthly inflation report. While CPI remains within the RBA’s 2-3% target band, trimmed mean CPI rose to 2.7% from 2.6% and headline CPI rose remained at 2.4% compared to 2.3% expected. And that was before Trump’s tariffs were effectively cancelled and reinstated within 24 hours, spurring a bout of unwelcome volatility that the RBA were sure to have noted.

Federal Reserve (Fed) Chair Jerome Powell is to deliver remarks at the 75^th anniversary of International Finance, though he is not expected to be commenting on monetary policy at this event. That said, traders will still be tuning in for any subtle cues, regardless. Though Powell’s recent comments have highlighted data dependence, and he’s unlikely to stray far from that line.

AUD/USD Correlations

The Chinese yuan, copper and gold continued to share a strong positive correlation with AUD/USD, and its relationship with the AU-US 2 year spread has effectively broken down.

AUD/USD Futures – Market Positioning From The COT Report:

Only minor adjustments were made to AUD/USD futures positioning last week, with large speculators increasing their net-short exposure by 2.1k contracts and asset managers decreased their by -2.8k contracts.

AUD/USD Technical Analysis

The v-bottom rally has stalled around a 61.8% Fibonacci level, with two false breaks of 65c. The sharp reversal back into the 64 – 65c range left a shooting star candle at its high, which could temp bears to fade into moves towards 65c. And with AUD/USD likely to remain rangebound of the foreseeable future, traders are likely to seek dips to 0.64000 or 0.6356 to trade the range is currently stuck in.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

FOREX.com is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment and CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.forex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.forex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 42.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.