[MARKET ANALYSIS] FX broadly within Thursday's wide ranges; GBP unfazed by PSNB and Retail Sales, Aussie weaker as banks shift tightening calls

DXY is higher on the session after closing +0.1% in a choppy Thursday session, Antipodeans lag amid the risk environment and shifting tightening bets.
Conflicting reports from the Gulf whipsawed the Buck on Thursday. Traders circulated fabricated reports that a final US-Iran draft had been reached, attributing the report to Al Arabiya, though this was later denied by the outlet. Despite this, progress in talks appears evident, while gaps remain on key issues, Uranium and Hormuz. Energy benchmarks have rebounded, and as such, DXY is a touch firmer. The index resides well above significant DMAs, and within recent ranges - today supported by 99.20. Today sees the UoM final release for May.
AUD is the worst G10 performer as domestic banks push back on RBA calls. Recent soft PMI, and labour market data which showed a surprise contraction in headline employment change, and an uptick in the unemployment rate prompted NAB and Westpac to push calls for tightening back to August, which both previously expected the first hike expected in June. Interest rate futures are now assigning 12% probability of a hike in June, and 40% in August. AUD/USD resides within Thursday's ranges, remaining below 0.72 and supported by 0.71.
GBP is unchanged against the Buck, and a touch firmer against the EUR. Retail Sales: Fell below expectation and previous. ONS noted the poor figure was driven lower by fuel purchases, suggesting motorists had full tanks, or had stopped stockpiling as fuel prices stabilised higher given the length of the energy disruption. PSNB: Little learnt net-net from today’s figure, with May’s data overshooting OBR, consensus and April’s figure significantly. However, borrowing in fiscal year 2025-2026 was revised lower to GBP 129bln from GBP 132bln below the OBR forecast. Pantheon, post-data wrote “We estimate that debt interest costs in 2026/27 will be about £15B higher than assumed in the Budget if gilt yields hold at current levels for the rest of the year”.
EUR/GBP lower by 0.1% and within Thursday's broad ranges. Support around 0.8640. GBP/USD unchanged, within recent ranges; support at 1.3400.