FX Daily: Upbeat Friday to lead the Monday session - Westpac

Westpac's analysts are out with their take on the broader market's leanings for the Monday session.

Key quotes

"Equity markets in Europe and the US were upbeat Friday, while oil prices rose after the OPEC meeting. The US dollar fell across the board, with AUD one of the better performers, up about 0.8% over the day to 0.7440. Today’s calendar is mostly quiet ahead of the June IFO Germany business survey and US May new home sales.

The OPEC meeting produced an agreement to raise output but by less than some in markets had anticipated, supporting prices on Friday after 3 days of declines. Saudi Arabia said it would act to boost supply to keep a lid on prices.

EUR/USD rose 0.5% over the day to 1.1665, though it did dip 20 pips in the London morning when President Trump threatened 20% tariffs on US vehicle imports from the European Union. USD/JPY ranged sideways between 109.80 and 110.20, the yen the worst G10 performer.

AUD was the best G10 performer, rising steadily from 0.7380 in the Sydney morning Friday to above 0.7440, helped by the improving equity mood. NZD was close behind, rising from 0.6860/70 to 0.6920. AUD/NZD rose from 1.0720 to 1.0780.

The US 10yr treasury yield closed on its daily low, around 2.89%, while 2yr yields ranged between 2.54% and 2.56%. Fed fund futures yields continued to price 1 ½ more hikes in 2018.

Australia’s data calendar is effectively empty this week. In Asia we will see Singapore May CPI and Taiwan May industrial production data.

The most influential survey of German business, from IFO, is due in the London morning. Little change is expected in June, with current conditions a very bullish 105.7 and expectations a warier 98.

A reasonably low key week of US data starts with May new home sales. This should confirm ongoing steady improvement in the sector which began in 2011. The Dallas Fed’s manufacturing survey is due. It is lower profile than the Philly Fed index which hurt the US dollar last Thursday."