Uptick across key commodities helps lift AUD
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Daily Currency Update
The Australian dollar edged higher through trade on Tuesday, buoyed by an uptick in key industrial commodity prices and an improved global growth outlook. Oil prices led gains amid rising tensions in the Middle East, while stronger-than-expected China manufacturing data helped underpin demand. WTI and Brent Crude both tested new highs while copper jumped near 1.5% and aluminium prices surged near 2%. Markets largely ignored an uptick in US treasury yields and risk aversion among equity markets and instead, the uptick across key commodities helped push the AUD back above US$0.65 with gains supported by a widening in the 10-year AU-US spread.Our attention now turns to China Caixin Services data for March while Eurozone CPI data and US services data dominate the overnight ticket ahead of Friday’s all-important US non-farm payroll print.
Key Movers
Price action among major currencies was well contained through Tuesday. The USD DXY index fell despite an uptick in US treasury yields and increased risk aversion across equity markets while oil-led currencies found support amid an uptick in oil prices. The Norwegian Kroner (NOK) and Canadian dollar outperformed with the NOK up 1.1%, leading all majors. With the euro edging back above US$1.0750 and the pound over US$1.2650 our attention now turns to Eurozone inflation data US ISM services data and ADP employment date for direction through trade on Wednesday. We expect EX core CPI to edge lower to 3% allowing investors to firm bets on a June rate cut as inflation runs toward the European Central Bank's 2% target. A surprise upside print could disrupt this timeline and afford the euro near-term support. US services data is expected to improve while ADP payroll data is expected to show a further slowdown in labour market performance ahead of Friday’s payroll print. With markets torn between pricing 3 or 2 Fed rate cuts into the end of the year term inflation and employment data will prove key in shaping expectations.Expected Ranges
- AUD/USD: 0.6450 - 0.6600 ▲
- AUD/EUR: 0.5980 - 0.6080 ▲
- GBP/AUD: 1.9200 - 1.9400 ▼
- AUD/NZD: 1.0830 - 1.0930 ▲
- AUD/CAD: 0.8800 - 0.8900 ▲