Australian dollar rose as risk appetite strengthened.
The Australian Dollar (AUD) rose slightly following the announcement of Westpac Consumer Confidence on Tuesday. The index declined 0.3% month on month in May, compared to a 2.4% drop in April. It was the third consecutive month of decline, although the slowest speed in the sequence.
China offered a large package to bolster its faltering economy, which could boost the Australian dollar. The property market, includes loosening lending laws and encouraging local governments to buy unsold homes. This could have boosted confidence in Australian markets because both countries are close trading partners.
Higher US Treasury yields provide support for the US dollar.
The US Dollar (USD) trades steadily in the absence of major economic data releases from the United States (US). Higher US Treasury yields help to boost the greenback. The US Federal Reserve (Fed) remains concerned about inflation and the prospect of rate decreases in 2024.
Daily Market Movers: Australian Dollar Advances Due to Increased Risk Appetite.
Minutes from the RBA’s May 2024 meeting revealed that the board contemplated hiking interest rates but eventually determined that the rationale for keeping a stable policy was stronger. Policymakers agreed it was tough. can either include or exclude future cash rate changes. They emphasized that the flow of data increased the danger of inflation continuing above goal for an extended length of time.
The ASX 200 fell to roughly 7,850 on Tuesday, following a mixed session on Wall Street. Losses at James Hardie and Sonic Healthcare outweighed increases in the technology sector. However, mining giants experienced an increase, owing to higher iron ore prices as a result of Beijing’s steps to bolster the faltering housing sector and a jump in copper prices.
Loretta Mester, President of the Federal Reserve Bank of Cleveland, told she no longer feels three rate decreases in 2024 are reasonable.
Loretta Mester, President of the Federal Reserve Bank of Cleveland, told Bloomberg that she no longer feels three rate decreases in 2024 are reasonable. Mester stated that inflation risks are skewed to the upside, emphasizing that there is no danger in spending more time gathering inflation statistics, given the economy’s resilience.
According to the CME FedWatch Tool, the probability of the Federal Reserve delivering a 25 basis-point rate drop in September has increased slightly to 49.6%, up from 48.6% a week ago.
On Monday, the Chinese Commerce Ministry prohibited General Atomics Aeronautical Systems, a US corporation, from engaging in import and export activities relating to China. This decision comes amid increasing trade tensions between the US and China. Because China and Australia are close trading partners, any economic change in China could stimulate the Australian market.
Michelle Bowman, a Federal Reserve Board of Governors member, commented on Friday that progress on inflation may not be as steady as many had thought. Bowman stated that the drop in inflation seen in the latter half of last year was only temporary, and that there has been no additional improvement on inflation this year.
