Daily Currency Update
The Australian dollar is slightly stronger this morning when valued against the Greenback. In Friday's trading session, the Australian Dollar (AUD) found demand against its US counterpart, with the AUD/USD pair making gains and trading at around 0.6650. Against the US dollar, the Aussie has added nearly 5 per cent over November, the biggest monthly gain in 2023. On Tuesday, the Australian dollar reached its highest level since late July, briefly hitting 67US cents in offshore trading before easing lower. The US has made strong progress in taming price pressures. While the US inflation rate peaked at 9.1 per cent in June last year, it has fallen to just 3.2 per cent in October and appears on track to hit Fed’s target of 2 per cent. Looking ahead this week all eyes will be on the Reserve Bank of Australia which is expected to leave rate on hold. While money markets are only pricing in a 5 per cent chance of a rate hike when the central bank meets on Tuesday, we could see further tightening by March.
Key Movers
In the United States on Friday for the 12th consecutive month, the US manufacturing sector experienced a contraction in economic activity in November. The ISM Manufacturing PMI remained unchanged at 46.7, lower than the market's expectation of 47.6. The US Dollar Index pulled back modestly after the ISM report, falling toward the 103.50 area. However, EUR/USD remained near daily lows at 1.0850. The US stock market indices ended higher on Friday with the S&P registering its highest close of the year on Friday, as remarks from US Federal Reserve Chair Jerome Powell bolstered the view that key policy rates have peaked. The Dow Jones Industrial Average rallied 294.61 points, or 0.82%, to end at 36,245.5, while the S&P 500 surged 26.83 points, or 0.59%, to 4,594.63 -- its highest level since March 2022. The Nasdaq Composite closed 78.81 points, or 0.55%, higher at 14,305.03. US Treasuries also gained and yields dropped amid rising bets on interest rate cuts next year. The yields on two-year US Treasuries declined 9 basis points (bps) to below 4.6%. Next week has a fairly thin showing for the economic data calendar, but eyes will be turning towards next Friday’s US Non-Farm Payrolls release, where the US is expected to see a marginal gain in the number of new job hires from 150K to 170K in November.
Expected Ranges
- AUD/USD: 0.6450 - 0.6650 ▲
- AUD/EUR: 0.6000 - 0.6200 ▲
- GBP/AUD: 1.8850 - 1.9050 ▲
- AUD/NZD: 1.0600 - 1.0800 ▼
- AUD/CAD: 0.8850 - 0.9050 ▼