Home Daily Commentaries AUD fails to maintain recovery despite USD softness

AUD fails to maintain recovery despite USD softness

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Thursday 8 February, 2024

Daily Currency Update

The Australian dollar underperformed through trade on Wednesday, unable to take advantage of USD softness and extend the recovery beyond U$0.6550. While most majors eked out small gains against the USD, the AUD closed lower on the day, down 0.1% having given up intraday highs at US$0.6539 to mark intraday lows at US$0.6516. With no domestic data on hand and no major offshore data or headline news flow, there is nothing specific driving AUD under performance outside of China's ongoing economic concerns and repositions global monetary policy expectations. With little of note on today’s local ticket, our attentions turn offshore. China CPI and PPI data dominates the local session. We expect data will show extended deflationary pressures with annual CPI to fall, amplifying calls for greater stimulus. US jobless claims headline overnight trade and could provide a contrast to last week's non-farm payroll print.

Key Movers

Price action across currency markets was subdued through trade on Wednesday with majors pitching between narrow support and resistance levels in the absence of any major headline data. The Great British Pound was the best performer following a stronger-than-anticipated surge in House prices. Sterling pushed through 1.26, marking intraday highs just short of 1.2640 while the euro bounced between 1.0750 and 1.0780, edging higher after ECB policymaker, Isabel Schnabel, proffered resistance to market calls for a near term rate cut. Markets have priced in 124 basis point reduction through the year, starting with a cut in April. In the US, Federal Reserve speakers offered no new insight, sticking to message and outlining a patient approach to monetary policy adjustments. US treasuries tracked a narrow range and the dollar moved within a skinny handle trading between 103.90 and 104.20.

Our attentions turn now to China inflation data and US jobless claims as the major items on the macroeconomic agenda through Thursday.

Expected Ranges

  • AUD/USD: 0.6470 - 0.6550 ▼
  • AUD/EUR: 0.6000 - 0.6100 ▼
  • GBP/AUD: 1.9250 - 1.9450 ▲
  • AUD/NZD: 1.0630 - 1.0730 ▼
  • AUD/CAD: 0.8720 - 0.8820 ▼

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.