AUD bludgeoned by a trio of forces
Daily Currency Update
The Australian dollar fell heavily through trade on Tuesday bludgeoned by the RBA rate announcement, a stronger USD and softer China data. Having opened near US$0.6720 the AUD fell through US$0.6650 as policy makers announced rates would be left on hold. While most had priced in a pause in the tightening cycle there were still some market participants pricing for a rise who were forced to quickly square positions, heaping downward pressure on the AUD. On the back foot, the AUD continued to track lower as a softer-than-anticipated China Caixin manufacturing report prompted yuan weakness, spilling into AUD softness and accelerating a move toward US$0.66. Having touched intraday lows at US$0.6601 the AUD then tracked sideways through the latter half of the overnight session as a broadly stronger USD prevented any hopes of a recovery.Our attentions turn now to US ADP employment data as a marker of labour market performance leading into Friday’s non-farm payroll print. While traditionally woefully inaccurate a strong read will still bolster hopes the US economy can foster a soft landing as price pressures ease and economic momentum builds again.
Key Movers
The USD is stronger across the board, buoyed by an upswing in US treasury yields, driven by expectations of an increase in longer-dated bonds. With US data printing in line with expectations hopes of a soft landing were buoyed lifting the USD DXY index. While the dollar index tracked higher the euro also outperformed, fighting back and closing higher on the day. Having slipped below US$1.0975 the single currency found momentum leading into the daily close, punching back above US$1.10 and opening just south of US$1.1020. The GBP on the other hand couldn’t keep pace with the USD and euro and slipped below US$1.28, marking intraday lows at US$1.2740 before finding support, while the yen continued its decline. Higher US treasury yields allowed the dollar to extend recent gains above ¥143, marking intraday highs at ¥143.50.Our attentions turn now to US ADP employment data. Ahead of tomorrow's Bank of England policy announcement and Friday’s all-important non-farm payroll print.
Expected Ranges
- AUD/USD: 0.6580 - 0.6750 ▼
- AUD/EUR: 0.5980 - 0.6120 ▼
- GBP/AUD: 1.8980 - 1.9480 ▲
- AUD/NZD: 1.0680 - 1.0830 ▼
- AUD/CAD: 0.8750 - 0.8900 ▼