NZD

• European politics. Concerns about the French elections has exerted pressure on the EUR. This helped push AUD/EUR higher.• US data. US PPI undershot forecasts. Inflation tide may be turning. US yields fell, but European issues supported the USD. AUD/USD drifted back.• AU jobs. May jobs report better than expected. At 4% unemployment is still low. Conditions for an RBA interest rate cut still look some time away. US economic and European political crosscurrents have pushed and pulled markets overnight. Data wise, following on from the lower than expected US CPI report US Producer Prices also undershot forecasts. Importantly, the...

• Data vs the Fed. Softer US inflation overpowered a ‘higher for longer’ Fed message. US yields fell, equities rose, & the USD weakened.• Stale forecasts? Fed assuming only 1 cut this year. Fed has moved to match the market. But Chair Powell noted ‘most’ didn’t tweak forecasts after the CPI.• AUD outperformance. Backdrop helped the AUD outperform. AU jobs report today. Could the ‘labour force lottery’ spring another surprise? US events generated a burst of market friendly volatility overnight with softer than predicted CPI inflation overpowering a more cautious ‘higher for longer’ message from the Federal Reserve. While there...

• Consolidation. US equities & yields little changed. USD slightly softer with EUR inching up after the ECB cut rates but was vague about future moves.• US jobs. Monthly US employment report in focus tonight. Signs conditions are cooling could revive US Fed rate cut bets. This may drag on the USD.• Other data. China trade figures out today. New RBA Deputy Gov. Hauser speaks. Next week US Fed meets, with US CPI & AU jobs also due. Consolidation was the name of the game across most major markets overnight. While European equities edged up (EuroStoxx600 +0.7%) the US S&P500...