US stocks gave back early gains to finish flat on Friday night. Financial stocks rose as the latest Fed stress tests showed the capital buffers of US banks remain robust.
And energy stocks in Australia may get a boost on Monday as supply concerns saw benchmark crude oil push back towards $US80 a barrel to end the week.
In currencies, the euro rose strongly after European leaders reached a consensus on migration at the EU summit. The pound also jumped after Q1 GDP in the UK was unexpectedly revised higher.
While quarter-end capital flows may also have been a factor, strength in the euro and pound weighed on the greenback and the Aussie rose back above US74 cents amid broader US dollar weakness.
The PCE inflation measure in the US showed annual core inflation growth rose to 2%, reaching the lower end of the Fed’s 2-3% target range for the first time in six years. Benchmark US 10-year bond yields edged higher to 2.86%.
It’s a busy week ahead in Australia to kick off a new month, while internationally markets will assess the ongoing threat of a trade war with the latest round of US tariffs against China scheduled to go into effect on Friday.
Key data will be led by retail sales for May on Wednesday. Data in April got a boost from the warm weather which saw more people eating out, but any miss in the headline figure is likely to reignite concerns about the health of the Australian consumer.
On Tuesday, the RBA will convene for its monthly interest rate meeting. Markets will be focused on the bank’s comments around tightening lending standards and global growth amid increasing trade tensions.
“Any dovish signal will see markets shift the pricing of the RBA tightening cycle into 2020, further weakening the AUD,” ANZ’s currency strategists said.
Also on Tuesday there’s building approvals data for May, following a slump in new homes sales last week which cast doubt on whether the recent strength in approvals will translate in actual starts.
And kicking off the week on Monday, CoreLogic’s monthly house price data for June is sure to get some attention, together with weekly auction clearance rates which just rose for the first time in seven weeks.
With the start of a new month, there’s finalised manufacturing PMIs for June scheduled for release throughout the week which will give an update on the global growth outlook.
That starts with the widely-read ISM manufacturing data out of the US on Monday night, along with manufacturing PMIs in the UK.
It’s a relatively quiet schedule in Europe in terms of key data, while in the US there’s the minutes from the Fed’s June meeting on Thursday night.
“FOMC minutes will likely show officials are upbeat (and rightly so), but this narrative has been well priced into the USD already and it’s unlikely to be a catalyst for renewed USD strength,” ANZ’s currency team said.
Then on Friday the latest round of US tariffs against China are scheduled to go into effect, and the US also has all-important payroll data on Friday night.
The US economy is forecast to add another 190,000 jobs in June, with average hourly earnings growth edging higher to 2.8%.
Here’s the full calendar, via ANZ (key events for currency markets in dark blue):