AUD

• Headline swings. US CPI hotter than expected. Interest rate markets adjust. Jump up in the USD didn’t last as positive geopolitical news hit the wires.• FX moves. EUR rebounded on reports talks to end the Ukraine war may take place. USD/JPY rose. AUD & NZD recovered lost intra-day ground.• Volatility. We think more short-term bursts of headline driven FX volatility are likely as the macro & geopolitical issues play out. Global Trends There was another burst of volatility across markets overnight, particularly in FX, as sentiment and the USD were pushed and pulled by US economic developments and geopolitical...

• Holding on. Yesterdays tariff headlines didn’t trigger a lasting market impact. Equities pushed higher, bond yields consolidated, & AUD rebounded.• Macro impulses. In addition to tariff news markets will be focused on Fed Chair Powell’s testimony tonight. US Fed looks to be in no rush to cut again.• Tariff news. AUD outperformed overnight. There are indirect headwinds but AU’s export basket looks rather tariff-insulated. US runs a trade surplus with AU. Global Trends Markets look to have taken the latest US trade tariff news in their stride. As outlined yesterday, the US is reportedly set to impose 25% tariffs...

• Holding pattern. Modest moves in most markets overnight. JPY’s upswing extends. AUD range bound just above its 1-month average.• UK rates. BoE cut interest rates by 25bps. 2 members voted for a larger move. More easing expected over time. AUD/GBP supported overnight.• US jobs. US employment report in focus tonight. Signs the US labour market is cooling could revive US Fed rate cut bets & drag on the USD. Global Trends A relative sense of calm in most markets overnight with only a few macro announcements, no fresh news regarding US trade tariffs, and the US jobs report due...

• Market swings. US equities ticked up while bond yields fell. This weighed on the USD. AUD & NZD continue to recover lost ground.• Data flow. US ADP employment improved but the services ISM declined. Non-farm payrolls released on Friday night. BoE rate cut expected tonight.• Stronger JPY. Wages in Japan accelerated. More BoJ rate hikes anticipated. This is JPY supportive. We see more AUD/JPY downside over medium-term. Global Trends In the absence of new US tariff related developments there has been a mixed performance across markets overnight. US equities swung around but on net ended the session in positive...