AUD slide continues on heels of softer yuan spills
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Daily Currency Update
Another day and another move lower for the AUD as ongoing weakness across equity markets, a risk-off tone and a lower fixing by the People's Bank of China forced the AUD to mark fresh 2024 lows. The AUD slid through supports at US$0.6440/50 tumbling toward US$US0.64 after the People's Bank of China set a lower fix for the CNY, suggesting there is some flexibility for the yuan to depreciate against the USD in line with markets and yield performance. While state banks sold USD to limit CNY losses the move weighed on the AUD as a proxy among majors. The AUD was unable to recover the early losses and tracked sideways through the overnight session testing a break below US$0.64 before edging back above this critical handle leading into the morning open. We start the day on the back foot and with no headline data on the domestic docket look offshore to NZ, UK and Eurozone CPI data and commentary across several Central banks with members from the Fed, Bank of England and European Central Bank hitting the wires. With inflation pressures taking longer than expected to dissipate we are looking for any clues as to the timing and trajectory of monetary policy change.Key Movers
The dollar traded within a narrow range through Tuesday as with much of the action across financial markets contained to equities, yields and rates. US Treasury yields marked fresh 2024 highs while US equities had a mixed session with both the Dow and S&P 500 closing lower. The DXY index traded up 0.16%, buoyed by softness across risk currencies and an extension against the yen. The risk of intervention continues to hang over the yen, yet the USD retained its upward trajectory as markets pushed back against comments from Japanese currency officials. The prohibited cost associated with intervention has allowed markets some scope to doubt calls by officials that intervention is imminent. With US yields driving gains markets remain on edge and we continue to monitor comments. The euro and GBP changed little with the euro trading near US$1.062 and GBP sliding below US$1.2450 and trading near US$1.2430.NZ, UK and Eurozone CPI data and commentary across several Central banks with members from the Fed, Bank of England and European Central Bank hitting the wires will drive direction through the day.
Expected Ranges
- AUD/USD: 0.6350 - 0.6500 ▼
- AUD/EUR: 0.6000 - 0.6100 ▼
- GBP/AUD: 1.9250 - 1.9550 ▲
- AUD/NZD: 1.0850 - 1.0950 ▲
- AUD/CAD: 0.8800 - 0.8900 ▲