The Australian dollar was in the front half of the field, two thirds of a cent ahead of the US dollar and three quarters of a cent behind the pound. On balance the Australian economic data were positive for the currency. Retail sales were buoyant in April and May's purchasing managers' index for the services sector was more than four points above forecast at 59.0. Gross domestic product expanded by 1.0% in the first quarter, beating expectations of 0.9% growth. The only real fly in the ointment was a slight narrowing of the trade surplus in April as imports remained flat while exports declined.
However, developments in the United States are working against the Aussie. Trump's trade war with China is likely to have knock-on effects on the Australian economy and rising US interest rates make the returns on the Australian dollar look relatively less attractive: two-year US government bonds return 2.5% per annum while the equivalent Australian issue yields only 2.1%.