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Aussie dollar holds above US$0.65
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Daily Currency Update
The Australian dollar is stronger this morning when valued against the Greenback currently trading at 0.6524 at the time of writing. The Australian dollar strengthened further on the back of rising yields in Australian government bonds, with the 10-year yield hitting a 21-week high of 4.59%. On the data front last week Australia’s inflation rate slowed less than expected in the March quarter as rents and education costs increased, dimming hopes the cost-of-living crunch was easing and lessening chances of a 2024 cut in official interest rates. The consumer price index for the first three months of 2024 was 3.6% higher than a year earlier, slowing from the 4.1% annual pace in the December quarter, the Australian Bureau of Statistics said on Wednesday. Economists had tipped CPI growth would drop to 3.5%. The March quarterly inflation rate was 1%, compared with the 0.6% pace in the December quarter. Economists had tipped it would rise to 0.8%. Looking ahead this week and on Tuesday the Australian Bureau of Statistics will release the monthly Retail Sales figures. On Wednesday the Reserve Bank of Australia will release the yearly Index of Commodity Prices measuring the average selling price of the nation’s main commodity exports are sampled and then compared to the previous sampling. Finally, on Friday we will see the release of monthly Building Approvals and Goods Trade Balance.Key Movers
In the United States last week US Gross Domestic Product Annualized (Q1) expanded at a slower pace of 1.6% compared to the previous reading of 3.4%, falling short of market expectations of 2.5%. This slowdown suggests potential headwinds or slowdowns in various sectors of the economy. However, US consumer prices have shown resilience, with the Personal Consumption Expenditures (QoQ) Price Index for Q1 increasing at a 3.7% annual rate. This exceeded both market expectations of 3.4% and the previous reading of 2.0%, indicating prevailing inflationary pressures that could influence Federal Reserve (Fed) monetary policy decisions.The Pound Sterling (GBP) faced selling pressure near 1.2500 against the US dollar on Friday. The GBP/USD pair drops as firm expectations that the Bank of England (BoE) will start reducing interest rates from the June meeting. BoE policymakers see inflation receding sharply in upcoming months but still refrain from providing a concrete time frame for interest-rate cuts. In the press conference after the last monetary policy meeting, BoE Governor Andrew Bailey said market expectations for two or three rate cuts this year are not “unreasonable”. Also, BoE policymakers have remained worried about high service inflation. Currently, the UK annual service inflation is at 6%, higher than what is required to be consistent for bringing down inflation to the 2% target. The GBP/USD pair is currently trading at 1.2494 at the time of writing.
Expected Ranges
- AUD/USD: 0.6400 – 0.6600 ▲
- AUD/EUR: 0.6000 – 0.6200 ▲
- GBP/AUD: 1.9000 – 1.9200 ▼
- AUD/NZD: 1.0900 – 1.1100 ▲
- AUD/CAD: 0.8800 – 0.9000 ▼
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