Daily Currency Update
The Australian dollar is slightly stronger this morning when valued against the Greenback. The Aussie dollar edged higher on Tuesday after registering losses in the previous session. The improved National Australia Bank's Business Confidence might have contributed to underpinning the Aussie Dollar. Moreover, the Australian Dollar might find support from the improved performance of Australia's share market. However, the Greenback managed to strengthen despite lower US Treasury yields, leading to some pressure on the AUD/USD pair. Yesterday the Australia NAB Business Confidence fell rose from -8 to -1 in December. However, Business Conditions fell from 9 to 7. The decline was observed across several key areas: Trading conditions dropped from 13 to 10, while Employment conditions also decreased slightly from 8 to 7. Profitability conditions remained steady at 6. Another significant development was the sharp decline in price and cost growth. Labour cost growth eased to 1.8% in quarterly equivalent terms, down from 2.3%. Purchase cost growth also declined from 2.5% to 1.6%. Overall price growth slowed from 1.2% to 0.9%, with a notable decrease in retail price growth from 1.8% to 0.6%. Looking ahead today we will see the release of the Flash Manufacturing PMI a survey of about 400 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.
Key Movers
In the US, economic data featured the Richmond Fed Composite and Manufacturing Index experienced a decline, moving from -11 to -15 in January. Conversely, the Services Index saw an improvement, rising from 0 to 4. Although the data was mainly ignored by investors, they had priced out the Federal Reserve’s March 2024 rate cut, pushing it back toward May. A week ago, investors anticipated the Federal Reserve to implement rate cuts totalling 175 basis points in 2024. However, as of writing, they modified their expectations to 141 basis points of monetary easing, effectively reducing their forecast by one rate cut. Ahead of the week, the US economic calendar will feature the US Gross Domestic Product (GDP) for last year’s Q4, along with Initial Jobless Claims and the Fed’s preferred gauge for inflation, the Core Personal Consumption Expenditure (PCE) price index.
Expected Ranges
- AUD/USD: 0.6480 - 0.6680 ▲
- AUD/EUR: 0.5960 - 0.6160 ▲
- GBP/AUD: 1.9180 - 1.9380 ▼
- AUD/NZD: 1.0700 - 1.0900 ▲
- AUD/CAD: 0.8750 - 0.8950 ▼