Daily Currency Update
After a week of turmoil price action through trade, Thursday was much more controlled and the AUD managed to arrest its precipitous fall despite a higher rates backdrop. Having slipped below US$0.6550 the AUD tracked sideways through much of the local session showing little reaction to local unemployment and labour market data. Jobs growth unexpectedly fell through December, but an upward revision in the November print and a stable unemployment print ensured there is little need for the RBA to change its current monetary policy path. The AUD bounced about US$0.6550 for much of the overnight session, pushing back toward US$0.6570 on hopes a peace deal between Israel and Hamas may be reached. The Financial Times reported on a plan, led by Arab States, to secure a ceasefire and release hostages as the first step in the road to securing peace in the region. Having touched intraday highs at US$0.6572, the AUD opens this morning at US$0.6565. Our attentions turn now to Japan CPI, UK and Canadian Retail Sales data, and US consumer sentiment and inflation expectations data as key drivers shaping the implied monetary policy narrative.
Key Movers
Price action was markedly tamer through Thursday when compared with the volatility that enveloped markets through the early part of the week. The USD DXY is up one tenth of a percent, extending the 1.25 appreciation enjoyed since Friday. With global rates moving higher and US yields rising, the dollar continues to outpace most major counterparties. The euro was flat on the day while sterling crept marginally higher and the yen held firm. Higher global rates were offset by reports of peace talks between Israel and Hamas, and while tensions between Iran and Pakistan escalated, risk sentiment improved allowing global equities to edge upward, buoyed by an improved economic backdrop and tech outlook, driven by the world’s largest manufacturer of semiconductors, the Taiwan Semiconductor Manufacturing Co. While implied monetary policy expectations continue to drive direction, our attentions turn to Japan CPI, UK and Canadian Retail Sales data, and US consumer sentiment and inflation expectations data for guidance into the weekly close.
Expected Ranges
- AUD/USD: 0.6500 - 0.6630 ▲
- AUD/EUR: 0.5980 - 0.6100 ▲
- GBP/AUD: 1.9100 - 1.9400 ▼
- AUD/NZD: 1.0680 - 1.0800 ▲
- AUD/CAD: 0.8800 - 0.8900 ▲