FXニュース

• USD/CAD trades on a softer note near 1.3605 in Monday’s early Asian session. 
• Canada’s CPI inflation data is estimated to ease to 2.8% YoY in April from 2.9% YoY in the previous reading. 
• The Fed is expected to keep the rate on hold until September, despite cooler-than-expected US inflation data.

The USD/CAD pair extended its downside around 1.3605 during the early European session on Monday. The weaker US Dollar (USD) on the prospect of a Federal Reserve (Fed) rate cut weighs on the pair. Investors await the Canadian Consumer Price Index (CPI) inflation data for fresh impetus, which is expected to ease to 2.8% YoY in April from 2.9% YoY in the previous reading. 

The markets expect the Bank of Canada (BoC) to begin rate cuts in June or July, ahead of the Fed's first move. However, Canada’s CPI inflation report on Tuesday will be in the spotlight, which could provide some hints about the next rate decision. The central bank might need to see easing inflation to be convinced to cut interest rates next month. Investors are currently pricing in nearly 40% odds of a BoC rate cut in June. This, in turn, might exert some pressure on the Loonie and cap the pair’s downside. 

On the other hand, the US Fed is anticipated to keep the rate on hold until September, despite cooler-than-expected US inflation data. Cleveland Fed President Loretta Mester, one of the FOMC’s more hawkish members, said that the Fed's current monetary policy stance is appropriate as it continues to assess incoming economic data. Additionally, Fed Governor Michelle Bowman said the policy is restrictive, but she is willing to hike rates if inflation stalls or reverses. The wait-and-see mode of Fed officials is likely to support the USD. 

 

Here is what you need to know on Monday, May 20:

Gold price surged higher and reached a new record peak near $2,450 at the beginning of the week. The European economic docket will not feature any data releases and major markets will be on holiday in observance of Whit Monday. In the second half of the day, several Federal Reserve (Fed) policymakers are scheduled to deliver speeches.

Reports of Iran’s President Ebrahim Raisi and Foreign Minister Hossein Amirabdollahian dying in a helicopter crash in Iran's East Azerbaijan province triggered a flight to safety in the early trading hours of the Asian session on Monday. After gaining more than 2% in the previous week, XAU/USD shot higher and was last seen rising more than 1% on the day above $2,440.

Gold price rises to a record high, escalating geopolitical tensions in focus.

Earlier in the day, the People's Bank of China (PBOC) announced that it held the Loan Prime Rates (LPR) unchanged across the time horizons. The Chinese central bank maintained the one-year and five-year LPRs steady at 3.45% and 3.95%, respectively.

PBOC keeps Loan Prime Rates steady, as expected.

After losing nearly 1% in the previous week, the US Dollar (USD) Index fluctuates in a tight channel at around 104.50 early Monday. The benchmark 10-year US Treasury bond yield stays flat slightly above 4.4% and US stock index futures trade modestly higher. Atlanta Fed President Raphael Bostic, Fed Vice Chair for Supervision Michael Barr, Fed Governor Christopher Waller and Fed Vice Chair Phillip Jefferson will be delivering speeches during the American session on Monday.

EUR/USD struggled to find direction and closed flat on Friday. Nevertheless, the pair registered gains for the fifth consecutive week. In the European morning, EUR/USD trades marginally higher on the day slightly below 1.0900.

GBP/USDrose nearly 1.5% last week and reached its highest level in nearly two months above 1.2700. The pair stays relatively quiet a few pips above 1.2700 early Monday.

USD/JPY moves up and down in a very narrow channel above 155.50 to start the new week. The findings of a survey, conducted by the Bank of Japan (BoJ) to assess its past monetary easing measures, showed that Japan is on the cusp of seeing big changes in corporate activity. "Many firms said they can no longer hire enough workers if they curb wages," the BoJ said and noted that more firms are starting to pass on rising labour costs to sales prices.

FX option expiries for May 20 NY cut at 10:00 Eastern Time, via DTCC, can be found below

- EUR/USD: EUR amounts

• 1.0850 991m
• 1.0860 731m
• 1.0875 1.2b
• 1.0890 907m
• 1.0900 1.4b

- GBP/USD: GBP amounts     

• 1.2645 459m

- USD/JPY: USD amounts                     

• 154.00 1.8b
• 155.00 789m
• 156.00 597m
• 156.45 807m
• 156.50 590m

- USD/CHF: USD amounts     

• 0.9050 811m

- AUD/USD: AUD amounts

• 0.6590 913m
• 0.6605 550m
• 0.6780 1b
• 0.6800 462m

- USD/CAD: USD amounts       

• 1.3535 721m
• 1.3730 735m

- NZD/USD: NZD amounts

• 0.6100 1.3b

• NZD/USD holds ground after NZIER Monetary Policy Shadow Board advised the RBNZ to keep the OCR unchanged at 5.5%.
• The US Dollar faces a challenge as softer US inflation sparked speculation about the Fed’s rate cuts in 2024.
• Fed’s Michelle Bowman suggested that the inflation decline last year was temporary and denied any further progress on this in 2024.

The NZD/USD pair trades around 0.6130 during Asian trading hours on Monday as investors anticipate the Reserve Bank of New Zealand's (RBNZ) policy meeting on Wednesday. The RBNZ is expected to maintain its Official Cash Rate at 5.5% for the seventh consecutive meeting. Policymakers are likely to emphasize the importance of keeping the policy restrictive for an extended period to bring inflation back to the 1-3% target range.

Additionally, on Monday, the New Zealand Institute of Economic Research (NZIER) Monetary Policy Shadow Board advised the RBNZ to keep the Official Cash Rate unchanged in the forthcoming Monetary Policy Statement, citing ongoing concerns about persistent high inflation.

On the other side, US consumer inflation eased to 0.3% in April, sparking speculation about potential rate cuts by the Federal Reserve (Fed) in 2024. However, the Fed remains cautious about inflation and the prospect of rate adjustments this year.

According to the CME FedWatch Tool, the likelihood of the Federal Reserve delivering a 25 basis-point rate cut in September has slightly increased to 49.0%, up from 48.6% a week ago. This potential easing of monetary policy by the central bank could undermine the US Dollar and bolster the NZD/USD pair.

Federal Reserve Board of Governors member Michelle Bowman made waves on Friday by suggesting that progress on inflation may not be as steady as anticipated. Bowman indicated that last year's observed inflation decline was temporary and that there hasn't been further progress this year. Additionally, Richmond Fed President Thomas Barkin noted that while inflation is moderating, achieving the Fed's 2% target will require more time.

The findings of a survey, conducted by the Bank of Japan (BoJ) to assess its past monetary easing measures, showed that Japan is on the cusp of seeing big changes in corporate activity.

Additional takeaways

Many firms said they can no longer hire enough workers if they curb wages.

More firms starting to pass on rising labour costs to sales prices.

Many firms regardless of size, sector, said an economy where wages and prices both rise is favourable for their business than that where wages, prices barely move.

BoJ’s monetary easing has underpinnned capex, corporate business activity by keeping borrowing costs low, improving availability of funds.

Some firms said they saw difficulty of hiring people, intensifying price competition as among side-effects of BoJ’s monetary easing.

Many big manufacturers cited FX moves as among effects that BoJ’s monetary easing had on their businesses.

Big manufacturers saw FX stability as biggest factor they wanted out of BoJ’s monetary policy.

Whether such changes in corporate activity broaden, become sustained would be crucial to Japan's economic, price outlook.

Market reaction

USD/JPY is unfazed by the above findings, trading modestly flat at around 155.75, as of writing.

• GBP/USD extends gains as softer US inflation raises expectations for Fed rate cuts in 2024.
• The US Dollar faces a challenge as US Treasury yields inch lower.
• The Pound Sterling may face a challenge as the BoE is expected to deliver 60 basis points rate cuts in 2024.

The GBP/USD pair extends its gains for the second consecutive session, trading around 1.2710 during the Asian hours on Monday. A weaker US Dollar (USD) supports the GBP/USD pair. April data indicated that US consumer inflation had slowed to 0.3%, raising expectations for potential Federal Reserve (Fed) rate reductions in 2024. However, the US Fed maintains a cautious stance regarding inflation and the possibility of rate cuts in 2024.

According to the CME FedWatch Tool, the likelihood of the Federal Reserve delivering a 25 basis-point rate cut in September has slightly increased to 49.0%, up from 48.6% a week ago. This potential easing of monetary policy by the central bank could undermine the US Dollar and bolster the GBP/USD pair.

On Friday, Federal Reserve Board of Governors member Michelle Bowman made headlines by noting that the progress on inflation might not be as steady as many had hoped. Bowman indicated that the decline in inflation observed in the latter half of last year was temporary and that there has been no further progress on inflation this year. Moreover, Richmond Fed President Thomas Barkin noted that inflation is easing but highlighted that it will "take more time" to reach the Fed’s 2% target.

In the United Kingdom (UK), investors expect a potential 60 basis points (bps) interest rate cut by the Bank of England (BoE) in 2024, with the initial cut expected in August. The UK Consumer Price Index (CPI) data for April, set to be published on Wednesday, is forecasted to show an annual rise of 2.7%, according to FactSet estimates. This data is expected to significantly influence the Pound Sterling (GBP).

BoE Governor Andrew Bailey remarked after the release of March’s CPI data, “Inflation in the UK will fall near its 2% target next month,” noting that inflation has declined roughly in line with the BoE’s February forecast.

• Gold price gains ground after reaching a record high on Monday. 
• The hopes for Fed rate cuts and escalating Middle East tensions boost safe-haven assets like gold. 
• Federal Reserve officials Bostic, Barr, Waller, Jefferson, and Mester are set to speak on Monday. 

The gold price (XAU/USD) gains momentum on Monday. The yellow metal hit a record high near $2,441 during the Asian session on Monday amid renewed hopes for interest rate cuts from the US Federal Reserve (Fed) and rising geopolitical tensions in the Middle East. Meanwhile, heightened tensions between Russia and Ukraine also bolstered safe-haven demand, with both nations launching attacks against each other over the weekend.

Later on Monday, gold traders will focus on the Federal Reserve’s (Fed) Bostic, Barr, Waller, Jefferson, and Mester speeches, which might offer some insight into the future path of monetary policy. The cautious approach or hawkish comments from Fed officials could limit the precious metal’s upside. 

Daily Digest Market Movers: Gold price edges higher amid geopolitical risks and uncertainties in the Middle East

• Iranian state television is reporting that there is “no sign of life” at the crash site of the helicopter carrying Iran's President Ebrahim Raisi, according to Reuters.
• Richmond Fed President Thomas Barkin noted that inflation is easing but highlighted that it will "take more time" to reach the Fed’s 2% target.
• Cleveland Fed President Loretta Mester said that the Fed's current monetary policy stance is appropriate as it continues to assess incoming economic data. 
• Fed Governor Michelle Bowman said the policy is restrictive, but she is willing to hike rates if inflation stalls or reverses.
• Financial markets have priced in 10% odds of a cut in June and a nearly 80% chance in September, according to the CME FedWatch tool.
• The People's Bank of China (PBoC) added 60,000 troy ounces of gold to its stash in April, marking the 18th straight month of gold purchases, according to official data released Tuesday.

Technical Analysis: Gold price keeps the bullish vibes, eyes on overbought RSI condition

Gold price trades with a positive bias on the day. The precious metal breaks above an ascending trend channel that has formed since May 2. Technically, the yellow metal maintains the bullish outlook unchanged on the four-hour chart as it is above the 100-period Exponential Moving Average (EMA), with the Relative Strength Index (RSI) holding above the midline around 82.50. Nonetheless, the overbought RSI condition indicates that further consolidation cannot be ruled out before positioning for any near-term gold upside. 

An all-time high of $2,440 acts as an immediate resistance level for XAU/USD. A decisive break above this level will see a rally to the potential upside barrier at the $2,500 psychological level. 

On the flip side, the resistance-turned support level at $2,415 will be the first downside target for the yellow metal. The crucial contention level is located at the $2,400 round number, followed by a low of May 16 at $2,370. 

• The Australian Dollar appreciates due to improved risk appetite on Monday.
• The Australian Dollar may struggle as Australia’s 10-year bond has dropped to its monthly lows.
• The US Dollar faces a challegne as US Treasury yields inch lower.

The Australian Dollar (AUD) extends gains for the second consecutive session on Monday. The weaker US Dollar (USD) supports to underpin the AUS/USD pair. However, the Aussie Dollar trims gains after the interest rate decision from China. The People's Bank of China (PBOC) kept the one-year and five-year Loan Prime Rates (LPR) steady at 3.45% and 3.95%, respectively.

The Australian Dollar may face challenges as the yield on Australia's 10-year government bond hovers around 4.2%, its lowest level in a month. This decline in bond yields follows a softer domestic jobs report for the first quarter. Slowing wage growth has led markets to discount the likelihood of any interest rate hikes by the Reserve Bank of Australia (RBA). Australia’s Wage Price Index (QoQ) increased by 0.8% in the first quarter, falling short of the market's forecast of a 0.9% rise. This quarter's increase is the smallest since late 2022.

The US Federal Reserve (Fed) maintains a cautious stance regarding inflation and the potential for rate cuts in 2024. On Friday, Federal Reserve Board of Governors member Michelle Bowman made headlines by noting that the progress on inflation might not be as steady as many had hoped. Bowman indicated that the decline in inflation observed in the latter half of last year was temporary and that there has been no further progress on inflation this year.

Daily Digest Market Movers: Australian Dollar advances due to risk-on mood

• On Monday, the Chinese Commerce Ministry announced a prohibition on General Atomics Aeronautical Systems, a US company, from engaging in import and export activities related to China. This decision comes amid ongoing trade tensions between the United States and China. Any economic change in the Chinese economy could catalyze the Australian market as both nations are close trade partners.
• On Friday, data showed that China's Retail Sales increased 2.3% YoY in April, down from March's 3.1% and falling short of the expected 3.8%. This marks the 15th consecutive month of growth in retail activity but represents the slowest uptick in this trend. Meanwhile, Industrial Production improved 6.7% YoY, surpassing the anticipated 5.5% and the previous recording of 4.5%.
• The US Department of Labor released the US Initial Jobless Claims on Thursday. The number of Americans filing new claims for jobless benefits rose to 222,000 for the week ending May 10, surpassing the market consensus of 220,000 but below the previous week's figure of 232,000.
• Sarah Hunter, Chief Economist and Assistant Governor (Economic) at the Reserve Bank of Australia (RBA), delivered a speech at the REIA Centennial Congress on Thursday. During her address, Hunter explored various potential strategies to address the imbalance between housing supply and demand growth. This issue looms large in Australia, with escalating prices, rents, and homelessness posing significant challenges.
• US Consumer Price Index (CPI) decelerated to 0.3% month-over-month in April and came in at a lower-than-expected 0.4% reading. While Retail Sales flattened, falling short of the expected increase of 0.4%.

Technical Analysis: Australian Dollar hovers around the psychological level of 0.6700

The Australian Dollar trades around 0.6700 on Monday. Observing the daily chart for AUD/USD showed an ascending triangle formation. Additionally, the 14-day Relative Strength Index (RSI) suggests a bullish sentiment, holding above the 50 mark.

The AUD/USD pair could test the upper limit of the ascending triangle, resting near the four-month peak of 0.6714. A breach above this level might prompt the pair to explore the area around the significant barrier at 0.6750.

On the downside, potential support stands at the nine-day Exponential Moving Average (EMA) at 0.6653, aligned with the major level of 0.6650. A break below the latter could lead the AUD/USD pair to navigate the region around the lower boundary of the ascending triangle around 0.6610 and the psychological level of 0.6600. A breakdown below this level could exert downward pressure, directing attention toward the throwback support at 0.6550.

AUD/USD: Daily Chart

• USD/JPY holds positive ground near 155.80 on Monday, 
• Fed’s Bostic said he saw signs of cooling inflation, but he prefers to watch more data before cutting rates. 
• The divergence in interest rates between the US and Japan weighs on the JPY and creates a tailwind for the pair. 

The USD/JPY pair trades in positive territory for the third consecutive trading day around 155.80 during the early Asian session on Monday. The downtick of the pair is supported by weaker Japan’s GDP data in the first quarter (Q1). The Fed’s Bostic, Barr, Waller, Jefferson, and Mester are set to speak later in the day. The FOMC Minutes will be due on Wednesday. On Friday, the Japanese National Consumer Price Index (CPI) will be in the spotlight. 

Atlanta Fed President Raphael Bostic stated on Friday that he saw signs of cooling inflation in the recent CPI report, but he prefers to watch the May and June data to make sure that the inflation doesn’t turn back the other way. Meanwhile, Richmond Fed President Tom Barkin noted the central bank needs to keep borrowing costs high for longer to ensure inflation is on track with its target.

Cleveland Fed President Loretta Mester said policy was well positioned, and it was too early to say progress on inflation had stalled. Richmond Fed President Tom Barkin noted the central bank needs to keep borrowing costs high for longer to ensure inflation is on track with its target. 

The wide interest rate differential between the US and Japan exerts some selling pressure on the Japanese Yen (JPY) and lifts the USD/JPY. The BoJ abandoned the world's only negative interest policy in March. It underlined that financial conditions would be kept easy and interest rates would slowly increase. 

• WTI Oil price gains ground after PBoC keeps interest rates unchanged on Monday.
• Oil prices may struggle possibly due to the hawkish remarks from the Fed officials.
• Crude prices may strengthen due to the optimism for increased demand from the US and China.

West Texas Intermediate (WTI) Oil price continues to gain ground after an interest rate decision from China, trading around $79.70 per barrel during the Asian session on Monday. The People's Bank of China (PBOC) kept the one-year and five-year Loan Prime Rates (LPR) steady at 3.45% and 3.95%, respectively. However, crude Oil prices may struggle following the hawkish remarks made by Federal Reserve (Fed) officials last week. Furthermore, Fed members Bostic, Barr, Waller, Jefferson, and Mester are scheduled to speak on Monday.

On Friday, Federal Reserve Board of Governors member Michelle Bowman made headlines by noting that the progress on inflation might not be as steady as many had hoped. Bowman indicated that the decline in inflation observed in the latter half of last year was temporary and that there has been no further progress on inflation this year.

Last week, WTI Oil price rose by around 2%, driven by optimism for increased demand from the United States (US), the world's largest oil consumer. April data indicated that US consumer inflation had slowed to 0.3%, raising expectations for potential Federal Reserve rate reductions in 2024. Such rate cuts could stimulate economic growth and energy demand. Additionally, lower US interest rates could weaken the US Dollar (USD), making Oil more affordable for buyer countries using other currencies.

Data from the US Energy Information Administration (EIA) showed that US crude stockpiles fell by 2.508 million barrels for the week ending on May 10, marking the second consecutive week of decline and surpassing the expected decline of 1.350 million barrels.

In China, industrial output increased by 6.7% year-on-year in April, indicating a robust recovery in its manufacturing sector and suggesting potential for stronger future demand. Additionally, Reuters reported that on Friday, China announced "historic" measures to stabilize its crisis-hit property sector. The central bank is providing 1 trillion yuan ($138 billion) in additional funding and easing mortgage rules. Additionally, local governments are set to purchase "some" apartments to support the sector.

Gold prices (XAU/USD) climbs to a record high near $2,441 during the early Asian trading hours on Monday. 

The bullish move of the precious metal is bolstered by the renewed hopes for interest rate cuts from the US Federal Reserve (Fed). Traders anticipated nearly two quarter-point cuts from the Fed this year, with November being the most likely starting point 

Amid simmering trade tensions between the United States (US) and China, the Chinese Commerce Ministry announced on Monday that the country prohibits general atomics aeronautical systems of the US from engaging in import and export activities related to China.

This comes after US Trade Representative (USTR) Katherine Tai announced last Tuesday that "further action required beyond tariff changes to address China's unfair policies."

Market reaction

AUD/USD has paused its upside near 0.7010 on the above headlines, still up 0.19% on the day.

The People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Monday at 7.1042 as compared to the previous day's fix of 7.1045 and 7.2162 Reuters estimates.
 

On Monday, the People's Bank of China (PBOC) held the Loan Prime Rates (LPR) steady across the time horizons.

The Chinese central bank maintained the one-year and five-year LPRs steady at 3.45% and 3.95%, respectively.

The decision was in line with the market expectations. 

In February, the PBOC lowered the five-year LPR by 25 basis points (bps) from 4.20% to 3.95.

Market reaction

At the time of writing, AUD/USD is holding gains near the 0.7000 level, up 0.18% on the day.

• Gold price kicks off the new week on a positive note near $2,415. 
• The softer US inflation data has prompted the Fed’s rate cut expectation, lifting the yellow metal.
• The hawkish comments from Fed officials might cap the precious metal’s upside. 

Gold price (XAU/USD) gathers strength around $2,415 during the early Asian session on Monday. The softer US inflation data in April provides some support to the yellow metal. Meanwhile, the USD Index (DXY), the value of the US dollar measured against a group of six foreign currencies, edges lower to 104.50, losing 0.03% on the day.  Investors will take more cues from the Fed’s Bostic, Barr, Waller, Jefferson, and Mester on Monday.

The growing speculation that the US  Federal Reserve (Fed) could lower rates in 2024 provides some support to XAU/USD as the lower rate increases the attractiveness of non-yielding Gold to investors. Both US CPI inflations for April dropped to 0.3% MoM from a 0.4% rise in the previous reading. Both the headline and Core CPI printed lower but in line with market expectations. 

On the other hand, the cautious approach from the Fed might cap the upside of the precious metal, as higher interest rates might well reduce overall investment demand for non-yielding gold. Last week, Fed Chair Jerome Powell said that he thinks the US central bank will need more data to gain confidence on whether inflation is steadily falling towards 2%. Also, many Fed officials emphasised the need to hold the rate higher for longer, which boosts the Greenback broadly. 

 

• EUR/USD holds positive ground near 1.0875 in Monday’s early Asian session. 
• Many Fed officials emphasized their cautious stance to hold rates higher for longer. 
• ECB’s Schnabel said they should move cautiously on rate cuts because there is a risk of easing prematurely. 

The EUR/USD pair trades on a stronger note around 1.0875 on Monday during the early Asian trading hours. The uptick in the major pair is bolstered by the softer Greenback. The Federal Reserve’s (Fed) Bostic, Barr, Waller, Jefferson, and Mester are scheduled to speak on Monday. Eurozone data highlight will be preliminary May PMI on Thursday.

Inflationary pressures eased in April, but the progress was unlikely to prompt the Fed to lower interest rates soon. The Fed Chair Jerome Powell said that he thinks the US central bank will need more data to gain confidence on whether inflation is steadily falling towards 2%. Furthermore, several Fed officials emphasized their cautious stance to hold rates higher for longer. 

Last week, Atlanta Fed President Raphael Bostic stated he saw signs of cooling inflation in the recent CPI report, but he prefers to watch the May and June data to make sure that the inflation doesn’t turn back the other way. Cleveland Fed President Loretta Mester said policy was well positioned, and it was premature to say progress on inflation had stalled. Richmond Fed President Tom Barkin noted the central bank needs to keep borrowing costs high for longer to ensure inflation is on track to its target. The lower bets on rate cut expectations from the US Fed might lift the USD and create a headwind for the EUR/USD pair. 

Across the pond, European Central Bank (ECB) policymaker Isabel Schnabel said the ECB may slash interest rates in June, but warned about further cuts in borrowing costs given uncertainty over the outlook. Nomura analysts stated “a gradual pace of three cuts this year is currently the most probable scenario,” despite the ECB's actions remaining data-dependent and could shift to more aggressive cuts if economic conditions worsen. 

• AUD/USD posts modest gains around 0.6695 on Monday. 
• The markets remain unconvinced that the Fed will pivot earlier than previously expected. 
• Australia’s Unemployment Rate rose more than expected last month, easing the possibility of another RBA rate hike.

The AUD/USD pair trades with a mild positive bias near 0.6695 during the early Asian session on Monday. The weaker US Dollar (USD) provides some support to the pair. The Fed’s Bostic, Barr, Waller, Jefferson, and Mester are set to speak on Monday. The Reserve Bank of Australia (RBA) will publish the minutes of its monetary policy meeting on Tuesday. 

Fed officials remain very cautious about cutting interest rates prematurely. Richmond Fed President Thomas Barkin noted that inflation is easing but highlighted that it will "take more time" to reach the Fed’s 2% target. Cleveland Fed President Loretta Mester said that the Fed's current monetary policy stance is appropriate as it continues to assess incoming economic data. Additionally, Fed Governor Michelle Bowman said the policy is restrictive but is willing to hike rates if inflation stalls or reverses.

The FOMC minutes will be due on Wednesday. In the latest meeting, the Fed held rates steady and the tone of the policy statement was little changed. The US central bank emphasized a lack of further progress toward its inflation objective. Investors have priced in 10% odds of a cut in June and nearly 80% chance in September. The higher-for-longer US rate narrative might boost the Greenback in the near term and cap the upside of the AUD/USD pair.

On the Aussie front, Australia’s jobless rate climbed more than expected last month, easing the chance of another RBA rate hike. The recent jobs report showed the economy added 38.5K jobs in April, while the Unemployment Rate rose to 4.1%. According to the RBA’s forecasts for employment and inflation, the Australian central bank expected the jobless rate would be 4% by June, 4.2% by year end, and 4.3% in June 2025.