AUD/USD attracts sellers on Wednesday as softer-than-expected Australian inflation data weighs on the Australian Dollar (AUD), while persistent uncertainty surrounding a potential US-Iran peace deal keeps the US Dollar (USD) supported.

The British Pound edges lower against the US Dollar as cautious market sentiment surrounding US-Iran talks supports the Greenback. At the time of writing, GBP/USD is trading around 1.3429, remaining on the back foot for a second straight day.

The Euro advances by 0.21% on Wednesday as risk appetite improves on news that Iran presented a draft framework to the US to end the conflict, which was cheered by financial markets. At the time of writing, the EUR/USD trades at 1.1649 after bouncing off daily lows of 1.1623.

Brown Brothers Harriman’s (BBH) Elias Haddad highlights New Zealand Dollar (NZD) outperformance after a hawkish hold from the Reserve Bank of New Zealand (RBNZ).

Scotiabank’s Analyst Team notes the Canadian Dollar (CAD) is slightly weaker versus the US Dollar (USD), extending losses to levels last seen in mid-April as wider US-Canada yield spreads weigh.

Bob Savage notes that BoJ Governor Kazuo Ueda frames current oil price shocks as a broad test of Japan’s inflation regime, amplified by Yen weakness and cost pressures.

USD/CAD gains traction on Wednesday as easing Oil prices pressure the Canadian Dollar, offsetting the impact of a softer US Dollar as traders digest fresh headlines surrounding a potential US-Iran peace deal. At the time of writing, the pair is trading around 1.3834, hovering near six-week highs.

MUFG’s Derek Halpenny says rising European yields reflect expectations that the ECB will deliver a 25bp rate hike on 11 June, with baseline inflation projections set to be revised higher.

The Canadian Dollar (CAD) is experiencing a period of relative stagnation against the US Dollar (USD), failing to match the upward momentum seen across other major G10 currencies. 

BNY’s Bob Savage highlights that the Reserve Bank of New Zealand (RBNZ) kept the Official Cash Rate (OCR) at 2.25% in a split decision but delivered a hawkish message, lifting its OCR path and inflation projections.

TD Securities’ Global Rates, FX & Commodities Strategy team reviews April Australian CPI, noting headline inflation undershot consensus while the trimmed mean matched expectations.

The New Zealand Dollar (NZD) strengthens against the US Dollar (USD) on Wednesday after the Reserve Bank of New Zealand (RBNZ) delivered a hawkish hold at its latest monetary policy meeting, signaling that the Official Cash Rate (OCR) will likely need to rise sooner and by more than projected in the

Commerzbank’s Antje Praefcke highlights Riksbank member Per Jansson’s argument that weaker demand, higher policy rates and softer inflation allow Sweden to wait and see despite the Iran-related energy shock.

Brazil Mid-month Inflation came in at 0.62%, above expectations (0.53%) in May

The Australian Dollar (AUD) strength against the New Zealand Dollar (NZD) may be about to reverse. 

ING’s Chris Turner notes EUR/USD remains sluggish despite progress toward a US–Iran agreement that could reopen the Strait of Hormuz and despite hawkish ECB commentary from Philip Lane and Isabel Schnabel.

The Euro (EUR) posts minor gains against the US Dollar (USD) on Wednesday, trading near 1.1640 at the time of writing, right below weekly highs at the 1.1650 area.

The Japanese Yen (JPY) keeps drifting lower against the US Dollar (USD) on Wednesday. The USD/JPY pair ticks higher for the fourth consecutive day, reaching fresh one-month highs at 159.45, and nearing the key 160.00 level, considered the limit of tolerable Yen weakness for Japanese authorities.

Societe Generale analysts highlight that AUD/USD has pulled back toward its 50-day moving average after an interim high near 0.7280.

MUFG’s Derek Halpenny notes USD/JPY is broadly stable as Japanese Government Bond demand improves and crude Oil declines support lower JGB yields. He highlights stronger super-long JGB auction metrics and broader domestic buying.

The AUD/USD pair attracts fresh selling following an intraday uptick to the 0.7180 supply zone on Wednesday and continues losing ground through the first half of the European session.

The US Dollar (USD) is trading flat against the Swiss Franc (CHF) on Wednesday, as the rebound from Tuesday's weekly lows near 0.7810 has been halted below a previous support level in the area of 0.7860.

The EUR/USD pair trades marginally higher to near 1.1640 during the European trading session on Wednesday. The major currency pair edges up as the Euro (EUR) trades broadly firm, even as uncertainty regarding the United States (US)-Iran deal continues to persist.

Standard Chartered’s Bader Al Sarraf and Nicholas Chia note that the Reserve Bank of New Zealand kept the OCR at 2.25% in a split 3-3 decision, with the governor’s casting vote preventing a hike.

The NZD/USD pair catches aggressive bids in reaction to the Reserve Bank of New Zealand's (RBNZ) hawkish on-hold rate decision on Wednesday, reversing the previous day's losses to a nearly one-week low.

Switzerland ZEW Survey – Expectations: -11.1 (May) vs -30.3

The Euro (EUR) extends its rally against the Japanese Yen (JPY) for the fourth consecutive day on Wednesday, reaching above 185.46 for the first time since an alleged intervention on April 30.

Silver price (XAG/USD) extends its losses for the second successive day, trading around $75.10 per troy ounce during the early European hours on Wednesday.

Commerzbank’s Volkmar Baur contrasts the Reserve Bank of Australia (RBA) with the Reserve Bank of New Zealand (RBNZ), noting Australia has already hiked three times and that April Consumer Price Index (CPI), including a monthly fall and lower annual rate, supports a pause.

The GBP/JPY cross attracts some dip-buyers following the previous day's modest pullback from the 214.65-214.70 region, or a fresh monthly peak, and sticks to its modest intraday gains through the early European session on Wednesday.