Daily Currency Update
The Australian dollar edged upward through trade on Thursday, bouncing off supports amid speculation the Bank of Japan may be preparing to exit its negative rates policy. Softer than anticipated domestic trade data pushed the AUD toward intraday lows near US$0.6520 before conjecture the Bank of Japan could adjust its negative rate framework before year-end sparked a USD shorting and led a rebound through the back end of local session and overnight trade. The AUD moved back through US$0.6550 and US$0.66, marking intraday highs at US$0.6614, before flattening out and tracking sideways into this morning’s open. After giving up ground through Monday and Tuesday amid a risk-off mood, the AUD has tracked within a narrow range as markets appear content in sidelining major bets ahead of tonight’s all important US non-farm payroll print. We have highlighted the importance of US policy expectations in shaping near-term AUD direction and a softening in US labor market performance could afford the AUD the opportunity to test new highs, supporting calls for the Fed to end its tightening cycle and forecast easier monetary policy through 2024. With markets trading sideways into tonight’s release, we expect ample price action leading into the weekly close.
Key Movers
The Japanese yen was the big mover yesterday amid a surge in speculation the Bank of Japan (BoJ) may be contemplating a series of exit options before the year is out. BoJ governor Ueda highlighted the challenges of managing the current monetary policy program in 2024 in a parliamentary address, while deputy governor Himino suggested existing the negative rate policy framework will have little impact on Japan’s economy. The comments sparked a surge in Japanese government bonds and short selling on USD/JPY. The dollar fell 2.5%, marking lows at 141.71 before settling near 143. Yen strength drove broad USD weakness with the DXY index falling over half a percent and affording other majors the chance to claw back early week losses ahead of tonight’s all important non-farm payroll print. With the USD on the back foot, our attentions are squarely affixed to US labour market performance for direction into the weekly close.
Expected Ranges
- AUD/USD: 0.6480 - 0.6690 ▲
- AUD/EUR: 0.6020 - 0.6150 ▲
- GBP/AUD: 1.8900 - 1.9300 ▲
- AUD/NZD: 1.0650 - 1.0750 ▲
- AUD/CAD: 0.8880 - 0.9020 ▲