Neutral-positive data on retail sales and industrial production in May supported the dollar, but not for long. The decline in the consumer sentiment index from the University of Michigan added anti-risk sentiment and contributed to the growth in demand for protective assets.

With pending the outcome of the FOMC meeting on June 18-1, volatility will be reduced at the beginning of the week.

NZD/USD pair

The PMI index in the manufacturing sector of New Zealand fell in May by 2.5p to 50.2p, which was the lowest level since December 2012. Of the main subindexes, only finished stocks increased, while the remaining parameters, such as employment in the sector, new orders and supplies, decreased. Also, the volume of production completely failed to 46.4p, which began to decrease.

On Wednesday, June 19, a report on GDP in Q1 will be published and growth is still expected at 2.2% despite a slight slowdown in New Zealand's economy, which is enough not to fear a massive recession. However, the economic momentum continues to slow down and additional monetary incentives may be required to support it, as ANZ predicts with a high degree of confidence.

The economy was saved from large-scale decline by high consumer demand, based largely on population growth due to migration (which provided up to 2/3 of GDP growth), but the influx of migrants began to slow down. Hence, the inevitable consequence is in the form of a slowdown in the growth of net consumption despite the low interest rates and high consumer confidence.

Exports also support the growth of kiwi, but more and more data indicate an extremely high level of debt load for dairy operators. However, if the trend towards a slowdown in world trade and global inflation persists, it will inevitably strike the country's export potential. A report on the balance of payments will be published on Thursday. Experts are waiting for the deficit to grow, and according to a set of criteria, we can expect that the yield of government bonds will continue to decline. In turn, this clearly indicates an increase in the likelihood of a decrease in the rate of the RBNZ.

In the previous review, we predicted a decrease in NZD and the forecast was fully realized. There are no changes in the trend on Monday morning. The kiwi is weakening as it come close to the support of 0.6480. It is possible that support will not go straight away and the kiwi will roll back higher to 0.6550/55, but the general direction remains downward with the target of 0.6425.

AUD/USD pair

Australia's labor market remained stable in May. Unemployment remains at 5.2% and growth in new jobs was noted. However, the effect from the report was blurred since the new growth was due to part-time employment growth.

Banking groups that track trends in the Australian economy are close. The business conditions index from the Ai Group continued to decline in May from a peak set 13 months ago. On the other hand, the NAB index slightly increased, pushing off from a 5-year low a month ago.

The consumer sentiment index from Westpac also declined in the first half of June. It already took into account the decrease in the RBA rate, which indicates that the positive momentum from the rate cut was not enough against the background of growing fears of a slowdown in the economy.

RBA assistant manager Ellis said last week that the RBA revised the unemployment rate at which we can expect accelerated wage growth in Australia due to a limited labor market. Government policy (monetary, fiscal and microeconomic) should now more directly target reducing unemployment and raising national wealth "along with low and stable inflation, one of the Bank's mandates is full employment".

Aussie tested the support of 0.6864 as expected but a further decline was postponed. Nevertheless, there are no reasons to expect an upward reversal. On the second attempt, the AUD/USD pair will try to update the minimum and go first to 0.6844 and then to 0.6801/11.