Australian dollar is continuing to strengthen as risk appetite improves.

The Australian Dollar (AUD) strengthened against the US Dollar (USD) for the third consecutive session on Tuesday, despite the weakening Australia’s retail sales (MoM) increased by 0.1% in April, reversing a prior 0.4% fall. This growth rate fell short of market forecasts of 0.2%.
An improved risk appetite further strengthens the AUD’s position. Furthermore, the most recent Reserve Bank of Australia (RBA) meeting minutes indicated that the board discovered it. It is difficult to foresee future cash rate changes, especially given that recent data suggest that inflation will remain above the 2-3% objective for an extended period of time.

US Dollar falls due to decreasing US Treasury yields.

The US Dollar (USD) is losing momentum as US Treasury yields fall. The US Dollar Index (DXY), which measures the value of the US dollar against six other major currencies, is trading around 104.50, with 2-year and 10-year yields on US Treasury bonds at 4.94% and 4.46%, respectively, as of press time.

According to the CME FedWatch Tool, the probability of the Federal Reserve enacting a 25 basis-point rate cut in September has dropped to 44.9%, down from 49.6% a week ago. On Tuesday, numerous US Federal Reserve (Fed) officials will Fed Governor Michelle Bowman, Cleveland Fed President Loretta Mester, and Minneapolis Fed President Neel Kashkari will also speak.

Daily Market Movers: Australian Dollar Appreciates Due To Risk-On Sentiment.

Shanghai, China, has announced measures to help the property market, such as lowering down payment requirements and minimum mortgage rates. On Friday, China also announced a US$47 billion state-backed fund to help expand its semiconductor industry. Because of the close trading relationship between China and Australia, any economic developments there could have a substantial impact on the Australian economy.
On Friday, the University of Michigan’s 5-year Consumer Inflation Expectations for May fell marginally to 3.0%, lower than expected at 3.1%. Despite an increase in the Consumer Sentiment Index to 69.1 from a previous reading of 67.4, it remains the lowest. Level in six months.
On Friday, the US Census Bureau issued Durable Goods Orders, which showed a robust recovery in April with a 0.7% month-over-month improvement, compared to the expected 0.8% fall. However, the result for March was reduced down to 0.8% from an early estimate of 2.6%.

Retail sales in Australia increased by 0.1% in April, compared to an estimated 0.2% increase and a 0.4% fall the prior month.

On Thursday, Australia’s consumer inflation Expectations for projected inflation in the following 12 months declined to 4.1% in May from 4.6% in April, the lowest level since October 2021.
The S&P Global US Composite PMI rose to 54.4 in May, its highest level since April 2022. The Service PMI jumped to 54.8, signifying the most annual output rise, while the Manufacturing PMI increased to 50.9.