Home Daily Commentaries Aussie dollar remains steady trading below 66 US cents

Aussie dollar remains steady trading below 66 US cents

Daily Currency Update

The Australian dollar is relatively unchanged this morning when valued against the Greenback around a psychological level at US$0.6600, amid market uncertainty driven by discussions between the United States and the United Kingdom on intensifying actions in the Red Sea. Nevertheless, the AUD/USD pair found some uplift from a subdued Greenback, influenced by a reduction in long-term US Treasury yields.

On the data front yesterday, the People's Bank of China has decided to keep its Loan Prime Rate (LPR) steady for both the one-year and five-year terms. The rate remains at 3.45% for the one-year period and 4.20% for the five-year period.

In a holiday-shortened week, the only local economic event of note will be the NAB Business Confidence survey released on Tuesday morning, previewed below, with the key drivers of the AUD/USD more likely to be risk sentiment, the outcome of central bank meetings in Japan and Europe and inflation data in the US.

The NAB Business Confidence survey index dived to -9 in November, the lowest print outside the Covid period since 2012. The market consensus is for a marginal rise to -7 in December. Within the sub-indices, employment and pricing intentions will be the focus, which were both on the firm side of things in November.

Key Movers

On the US front, the University of Michigan reported on Friday that the Consumer Sentiment Index climbed to 78.8, the highest level since July 2021. The assessment of current economic conditions grew to 83.3, while the expectations component rose to 75.9. The index for January was the highest since July 2021. The index climbed 13.1% month over month, marking its fastest pace of increase since December 2005.

The sub-index for the current economic condition increased to 83.3 in January from 73.3 in the previous month. The sub-index for consumer expectations increased to 75.9 in January from 67.4 in November. Expectations of overall inflation for the next 12 months rose to 2.9% in January, marking the lowest reading since December 2020. The metric declined significantly from its peak of 5.4% in April 2022.

Long-run inflation expectations fell to 2.8%, below the 2.9-3.1% range seen for 26 of the last 30 months. On Dec 20, the Conference Board reported that its consumer confidence index for December came in at 110.7, beating the consensus estimate of 104.5.

November’s data was revised downward to 101 from 102 reported earlier. The market sentiment appears to be influenced by the expectation that the Fed may cut interest rates more than other major central banks in 2024, which could exert selling pressure on the Greenback.

Expected Ranges

  • AUD/USD: 0.6570 - 0.6770 ▼
  • AUD/EUR: 0.5935 - 0.6135 ▼
  • GBP/AUD: 1.9240 - 1.9440 ▲
  • AUD/NZD: 1.0700 - 1.0900 ▲
  • AUD/CAD: 0.8750 - 0.8950 ▼