The Australian dollar is drifting as traders await fresh catalysts for direction

Cameron Spencer/Getty Images
  • The Australian dollar did very little to start the new trading week.
  • US and UK markets were closed for public holidays. There was also very little economic data or trade headlines on offer.
  • Those markets will return on Tuesday although the economic events calendar remains light.

The Australian dollar remained range-bound on Monday, reflecting a lack of “new” news and that US and U.K. markets were closed for public holidays.

Another quiet session on Tuesday looks to be on the cards, excluding any unexpected trade headlines, with little in the way of major economic data scheduled for release.

Here’s the scoreboard at 7am in Sydney. All data from Refinitiv.

AUD/USD 0.6917 , -0.0006 , -0.09%
AUD/JPY 75.76 , 0.24 , 0.32%
AUD/CNH 4.7771 , -0.0025 , -0.05%
AUD/EUR 0.6175 , 0.0004 , 0.06%
AUD/GBP 0.5455 , 0.0024 , 0.44%
AUD/NZD 1.0568 , 0.0023 , 0.22%
AUD/CAD 0.9298 , -0.0011 , -0.12%

As the scoreboard suggests, it was an uneventful session for all major crosses as traders await fresh catalysts for direction.

The AUD/USD oscillated in a thin 28 pip range, initially rising in Asia before dipping in the second half of the session.

The modest reversal followed remarks from US President Donald Trump that US tariffs on Chinese goods “could go up very, very substantially, very easily”.

“AUD/USD eased modestly in thin overnight trade as the USD firmed on US President Trump’s comments,” Richard Grace, chief currency strategist at the Commonwealth Bank, said.

Grace added that the “AUD/USD will continue to remain in a tight range for now until we get a major catalyst”.

“The 4 June RBA rate cut is unlikely to be a major catalyst, unless the accompanying RBA statement provides guidance of further RBA rate cuts, which we don’t believe it will. That is generally not Phil Lowe’s style,” he said.

Financial markets see a 25 basis point rate cut from the RBA next week as a near-certainty.

Investing.comAUD/USD Hourly Chart

Against the crosses, the British pound softened following the conclusion of European parliamentary elections over the weekend.

“The results … confirmed a strong showing for Nigel Farage’s Brexit party, which topped the vote share with 32%,” said Rodrigo Catril, Senior FX Strategist at the National Australia Bank.

“The Conservative party was the big loser coming fifth and with just 9% of the votes. Conservative leadership hopefuls have pounced on the election result, suggesting that the electorate wants Brexit to be delivered.”

Turning to the day ahead, there’s little in the way of major economic data on offer, paving the way for headlines, positioning and technicals to dictate broader direction.

Often, the performance of Chinese financial markets are influential during Asian trade on quiet data days, especially given increased focus on trade negotiations with the U.S.

In Australia, the weekly ANZ-Roy Morgan consumer confidence index will be released, providing the first clear indication as to how Australians are feeling following the Federal election earlier this month. It’s unlikely to be market moving.

Elsewhere, German consumer sentiment, along with a raft of house price indicators and Conference Board consumer confidence from the US, will also be released.

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