ASX

After a hefty pullback, 19k looms for Nasdaq futures traders. Yet the higher timeframes suggests there could further downside even if it manages a bounce from nearby support. The ASX may fare better as its pullback is so far pale in comparison.

AUD/USD tracked copper prices lower for a sixth day, during its worst day in six weeks. Whilst both markets shows the potential for further losses, these may not be the ideal levels for bears to enter.

Another turbulent session on Wall Street saw the Dow Jones snap a 6-day winning streak, the VIX rise to a 12-week high and drag ASX 200 futures down accordingly.

The ever-weaker yen allowed USD/JPY to drift higher for a third day, and now trades less than a typical day's range from the 162 handle - a level not tested since 1986. Wall Street indices reached record highs on dovish comments from Jerome Powell's testimony, and that bodes well for the ASX 200 today.

Gold's rally paused for breath below resistance ahead of NFP, where volatility is expected. The ASX bumped its head at resistance and looks primed for a retracement lower during what could be a quiet session ahead of NFP.

US yields were a touch lower with Jerome Powell saying that inflation is on the disinflationary path, ahead of key economic data from the US including ISM services, JOLTS and ADP employment reports. The ASX 200 and China look poised to move higher following a strong lead from Wall Street ahead of Independence Day.

Australia’s ugly inflation report for May continues to impact markets 24 hours after its release, and not just those in Australia. But initial reaction, and price action since, continues to provide signals and setups in ASX 200 SPI futures and AUD/USD.

There is now little doubt underlying inflationary pressures in Australia are accelerating again, increasing the risk the Reserve Bank of Australia (RBA) will be forced to hike interest rates again for the first time since November. AUD/USD, Australian bond yields surge while ASX 200 tanks.

Obvious month-end window dressing in Australia and United States stocks drove significant late session rallies on Friday, sending Australian ASX 200 futures surging 1.5% from the lows hit in Asia. But with commodity prices down heavily on Friday including iron ore, whether the gains can stick is questionable.

Downwardly revised GDP for the US in Q1 weighed on Wall Street indices ahead of a key inflation report, yet the ASX and Nikkei managed to bounce form their lows. We look at where we think they might head next.

Disinflationary forces in Australia have stalled with annual rates for headline and underlying inflation trending flat to higher, and well above the 2.5% midpoint of the RBA’s target. Not only does that weaken the case for rate cuts but means the next move from the RBA may be a hike.

Volatility levels were lower, as one would expect with the UK and US on a public holiday Monday. And that allowed AUD/USD to drift higher alongside the ASX 200 futures market, even if I do not fully trust the moves.

USD rallied against all FX majors except the pound on Wednesday following thanks to not-so-dovish FOMC minutes. AUD/USD now finds itself struggling to hold 66c.

AUD/NZD looks set to capitalise on its rise from Friday's, which could be helped by even a slightly dovish RBNZ meeting. SPI 200 futures were higher overnight to suggest the ASX 200 could break to the upside from its daily compression pattern.

The performance of mainland Chinese stock indices and minutes from the RBA May monetary policy meeting should be on the radar for anyone trading AUD/USD or ASX 200 futures on Tuesday. With little top tier data or event risk to navigate, they loom as the most likely drivers of Australian financial markets.

AUD/USD and the ASX 200 have flourished this week thanks to renewed bets of Fed cuts, even though softer employment and wages data for Australia rekindled hopes of a lower RBA cash rate.

The USD was weaker despite higher producer prices, as traders placed greater emphasis on last month's figures being revised lower. And that now sees a 51% chance of a September Fed cut, according to Fed Fund futures.