USD Shrugs off Slowing Inflation, AUD Slides on AU Jobs Data

USD Ignores Soft CPIs Amid Risk-off Trading

The dollar traded higher against all but two of the other G10 currencies on Wednesday and during the Asian morning Thursday. It underperformed slightly against JPY, while it was found virtually unchanged against NZD. The main losers were AUD, NOK and EUR in that order.

USD/CHF — Technical Outlook

From the beginning of May, USD/CHF has been drifting lower, trading below its short-term downside resistance line taken from the high of May 7 th. But recently, the pair started moving sideways, roughly between the 0.9860 and 0.9960 levels. If the rate struggles to push above the upper side of that small range, this could attract the sellers back into the game and USD/CHF may slide towards slightly lower areas. This is why we will stay somewhat bearish for now.

Australia’s Employment Data Hit the Aussie

Among the G10 currencies, the main loser was the Aussie. Apart from a general risk-off trading, which usually results in AUD selling, Australia’s employment report for May added extra pressure to the currency. At first glance, the report did not appear that bad. It showed that the economy gained more jobs than in May, while the forecast was for a slowdown. The unemployment rate remained unchanged at 5.2%, instead ofticking down to 5.1% as the forecast suggested, but the participation rate rose as well, which perhaps means that more people are encouraged to actively start looking for a job, and that’s why the unemployment rate did not decline.

AUD/JPY — Technical Outlook

During the Asian morning today, the Australian dollar took a hit against all of its major counterparts. AUD/JPY broke below its key support area, at 74.95, marked by the low of June 3 rd, this way clearing the path for itself to move further down. The pair is also trading below its short-term downside resistance line drawn from the high of May 20 th. We will stay somewhat bearish for now and continue targeting slightly lower support zones.

As for Today’s Events

During the European day, the SNB decides on interest rates. At their latest gathering, Swiss policymakers kept interest rates unchanged at -0.75%, sticking to their guns that they will remain active in the foreign exchange market as necessary, and noting that the franc is still highly valued. They also revised further down their inflation projections. They expected the Swiss CPI rate to be at +1.5% yoy in Q4 2021, well below their 2% target, and this is conditional upon interest rates staying at current levels for the whole forecast horizon.



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