Marketwatch APAC

Market Watch APAC – 15^th May 2024

The AUDUSD regains session losses to resume in Asia above the 0.66-cent level, after the US-dollar retreated following Powell’s comments to ‘cool down’ the higher than predicted US PPI release. He still is confident that inflation will decline and bullish on the overall US economy. The rally in Copper and base metals has underpinned the AUD gains for the day, as well as noted carry trade flows, particularly AUDJPY. The Federal budget delivered energy and rent relief and though monetary policy has been loosened, the additional spending from the budget is not expected to jolt the RBA into raising rates, more a hold for higher and longer solution. Australia release of the local Wage Price Index Q1 today will draw some trader attention, but US CPI tonight will be the main event. The AUDUSD opens the Asia session again above 0.66-cents, with noted strong resistance at  0.6650/75 zone prevailing. Support seen overnight at 0.6575/85 zone again and continuing behind at 0.6550’s in the short term.

Wall Street indices all moved higher for the day reassured by Fed Chair Powells comments to suggest rate cuts are coming and as the market awaits the latest read for US Inflation due out tonight. The DJI was up +0.3%, the S&P500 gained +0.5%, and the Nasdaq gained 0.7% for the session. Australian shares should open on the front foot today, but investors will hold out for the US inflation read to reaffirm interest rate expectations later in the year for both the RBA and the Fed, plus digesting the latest Federal Budget implications for inflation.

Gold prices grabbed back the losses from the previous day, after US PPI implied inflation was still high and as investors awaited the CPI data for clearer direction and timing of Fed rate cuts this year.

Copper prices attracted further attention rallying higher on arbitrage trading and fund based interest.

Brent Crude prices fell after US data implied stubborn inflation would keep rates higher for longer, while supply constraints from Middle East tensions and wildfires in Canada provided some support.