Month-end, quarter-end and half year flow led to some choppy trade for the first half of the week. The USD was rising even while US10 year yields were falling midweek which is an unusual move and most likely due to portfolio flows. The ADP number printed in pretty strong this week boosting the USD, but the focus for the USD will be the non-farm payroll numbers.  A strong number on Friday and this should boost the USD higher into the end of the week. A disappointing print and gold should rally in the short term. US oil remains bid as investors await the latest OPEC+ production decision.

Other key events from the past week

  • AUD: Sydney is in lockdown, June 27: 50% of Australia has now returned to lockdowns as the delta variant spreads. With less than 8% of Australia’s population vaccinated the AUD is at risk of further falls versus the JPY in the near term.
  • Bitcoin: Holds $30,000, June 30: The key $30,000 level has held despite negative sentiment from both China and the UK regarding cryptos. Government concerns about crypto volatility are seen as a risk to their citizens, but is the bad news priced in and is the $30,000 level now a near term floor for BTC?
  • USD: Strong ADP print, June 30: ADP jobs came in high at +692K vs +600K. However, the correlation between ADP jobs and NFP jobs is effectively zero. The key USD focus for bulls this week is whether the US is seeing workers return.

Key events for the coming week

  • AUD: RBA rate decision, July 06: Various lockdowns across Australia now make it unlikely that the RBA will reduce its QE purchases this week. Will the AUD move lower after the meeting?
  • USD: Services PMI & FOMC minutes July 07: Wednesday is a key day for the USD next week as services PMI are released & the Federal Reserve release their minutes too. Investors will read it carefully for clues on the Fed’s tapering timing.

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