Home Daily Commentaries Aussie dollar trades above US$0.68

Aussie dollar trades above US$0.68

Daily Currency Update

The Australian dollar is slightly stronger this morning when valued against the Greenback, currently trading at US$0.68 at time of writing. On Friday the Australian dollar reached its highest in four months, after surging 1.3%. It is set for a 2.2% weekly gain, the best since mid-November 2022, and way off its 2023 low of 0.6459 two weeks ago. If AUD/USD manages to move higher, the next resistances to watch are at the daily high at 0.6890, followed by the psychological mark at 0.6900 and the 0.6920 area. On the other hand, immediate support for the pair line up at 0.6800, 0.6730 and 0.6690. The JPY was left at the bottom last week after the Bank of Japan (BoJ) left policy unchanged and Governor Ueda gave no succour to those (like us) looking for a shift out of next month’s meeting. AUD/JPY pair rallied by 4.7% on the week. USD/JPY rising to its highest since 22 November 2022, just shy of ¥142.

On the local data front, eyes are on this week’s Reserve Bank of Australia (RBA) minutes on Tuesday. It's a detailed record of the Reserve Bank Board's most recent meeting, providing in-depth insights into the economic conditions that influenced their decision on where to set interest rates. We will also hear from RBA Assistant Governor (Financial Markets) Christopher Kent who is due to participate in a panel discussion titled "Managing Risk in Volatile Markets" at the ISDA/AFMA Derivatives Forum, in Sydney. On Friday we will see the release of the Purchasing Managers' Index (PMI) a survey of about 400 purchasing managers, which asks respondents to rate the relative level of business conditions, including employment, production, new orders, prices, supplier deliveries, and inventories.

Key Movers

On the data front in the US, The University of Michigan (UoM) reported on Friday that the Michigan Consumer Sentiment Index came in at 63.9 in June vs 60 expected and accelerated from its previous figure of 59.2. In addition, the five-year Consumer Inflation Expectation from June dropped to 3% vs the consensus of 3.1%. The data helped the US dollar find its feet after the recent decline. It's worth noting that on Wednesday, the revised dot plots from the Federal Open Market Committee (FOMC) showed that members are seeing two more 25 bps hikes this year, so the hawkish stance from the Fed gives the USD traction. US equities retreated from 2023 highs on Friday, but the S&P still added more than 2.5% over the week with global stock indices also making solid gains.

The EUR/GBP is breaking below the support area of 0.8540 and is currently trading around 0.8530, its lowest level since August 2022. The cross resumed its downward trend after a brief pause and a short-lived rebound following the European Central Bank (ECB) meeting. On Thursday, as expected, the ECB raised rates by 25 basis points. Despite the hawkish tone from President Lagarde, who mentioned that another hike in July was likely, the EUR/GBP only rose modestly approaching 0.8600 and then weakened again. According to revised macroeconomic projections, headline inflation is expected to average 5.4% in 2023, 3.0% in 2024, and 2.2% in 2025.

Expected Ranges

  • AUD/USD: 0.6750 - 0.6950 ▲
  • AUD/EUR: 0.6200 - 0.6400 ▲
  • GBP/AUD: 1.8550 - 1.8750 ▼
  • AUD/NZD: 1.0900 - 1.1100 ▲
  • AUD/CAD: 0.8950 - 0.9150 ▲