This morning we received a raft of local economic data along with China’s CPI and PPI for May. NAB business confidence showed a slight improvement, while ANZ job ads and home loans data disappointed. Although NAB business confidence showed an improvement, business conditions deteriorated further and dipped into negative territory.
On the China front, CPI was much firmer at +2.5% for May (up from +1.8%) and even ahead of estimates of +2.4%. This rebound in prices is consistent with the notion that China has been taking easing measures in order to revive growth.
With that in mind the AUD remained resilient and even added some ground with AUD/USD printing a high of 0.9363. The pair encountered a barrier at that level and has since been sidelined. While AUD/USD is the main pair to watch, there is an interesting trend developing in EUR/AUD. The pair is testing November lows in the 1.4520 region and this could be broken if EUR weakness continues in the near term. The European calendar is relatively light today with French and Italian industrial production being the only readings to look out for.