SGD

• Consolidation. Quiet start to the week. Easing French election risks supported European equities & the EUR. Softer USD pushed AUD a bit higher.• JPY watch. USD/JPY is around levels which previously triggered bouts of FX intervention. Verbal rhetoric by Japanese officials is starting to pick up.• Inflation pulse. US core PCE deflator (due Fri) likely to slow, while monthly AU CPI (due Weds) could re-accelerate. Diverging trends are AUD supportive. It has been a quiet start to the new week. This isn’t surprising given the bulk of the potential market moving global releases such as US durable goods orders...

• Positive vibes. Concerns about the upcoming French election settled down. Equities rose, as did bond yields, with EUR also a little higher.• RBA today. No change from the RBA anticipated. It is likely to reiterate that it isn’t ruling anything in or out. The first RBA cut isn’t priced until mid-2025.• Global data. Yesterday’s China data batch was mixed. Tonight, US retail sales are released. A modest rebound is US consumer spending is predicted. A bit more of a positive tone in markets at the start of the new week. Concerns in Europe about the upcoming French parliamentary elections...

• 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...