Aussie dollar marks fresh 3-month high as USD under pressure
Daily Currency Update
The Australian dollar extended gains, recording a 3-month high on Monday, as pressure continues to mount on the USD following last week's CPI inflation update. With little of note on the macroeconomic docket, the AUD expanded on last week’s recovery pushing above US$0.6550 for the first time since August.Investors have amended expectations for Fed policy after last week's US CPI print, pricing in an end to this tightening cycle while forcing a downward correction across treasury yields. Equities and risk assets have rallied as two and ten-year rates pare gains won through September and October. With the USD under pressure, the AUD has enjoyed renewed support as improved commodity prices help underpin gains.
Iron Ore has pushed above $130 a tonne for the first time since March, while oil prices rallied 2% on reports OPEC is considering expanding production cuts this coming weekend. Having consolidated a break above US$0.65, our attention turns to RBA Governor, Michelle Bullock, as she participates on a panel at the APEC forum. The RBA minutes will hopefully provide further guidance on future monetary policy moves, expanding on the current hawkish bias.
Key Movers
The US dollar continued lower through trade on Monday as speculative positioning and a contraction in treasury rates forced investors to extend last week's losses. While mild, the downside surprise in last week's CPI inflation report appears to be the catalyst affording investors confidence to price in an end to Fed tightening and move on pricing in a correction in rates through H2 2024.The USD failed to push back above 150 against the yen as speculative short yen positioning exacerbated the recent slide-off highs near 152, while the euro and GBP held gains won last week as the dollar index gave up another 0.4%. Against the weaker backdrop, the USD also gave up ground against the CNH. The PBOC set a stronger-than-anticipated fix Monday, allowing the yuan to extend toward its highest level since September.
With little of note on today’s docket, we expect price action will settle as markets prepare positions leading into the Thanksgiving extended weekend.
Expected Ranges
- AUD/USD: 0.6380 - 0.6580 ▲
- AUD/EUR: 0.5950 - 0.6030 ▲
- GBP/AUD: 1.8900 - 1.9200 ▼
- AUD/NZD: 1.0820 - 1.0920 ▲
- AUD/CAD: 8920 - 0.9020 ▲