Home Daily Commentaries Aussie dollar falls below US$0.65

Aussie dollar falls below US$0.65

Brett Ottawa
Written by
Brett Ottawa

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market.

| Monday 5 February, 2024

Daily Currency Update

The Australian dollar is weaker this morning when valued against the Greenback trading at 0.6477 at time of writing. The AUD/USD plunged more than 0.90% on Friday after a robust US Nonfarm Payrolls report triggered a jump in US Treasury yields as investors disregarded a rate cut by the Federal Reserve in March. On Friday the Australian dollar (AUD) received support from improved Producer Price Index (PPI) data. Australian Bureau of Statistics has released the PPI (YoY) for the fourth quarter, indicating an improvement with a growth rate of 4.1%, surpassing the previous growth of 3.8%. Furthermore, an enhanced Australian money market is contributing support to strengthen the Aussie dollar. In a Reuters Poll, analysts unanimously expect the Reserve Bank of Australia (RBA) to keep the interest rate steady at 4.35% in its February policy meeting. Australia’s Home Loans fell by 5.6% in December as compared to the 0.5% growth in November.

Looking ahead this week and today we will see the release of the Australia and New Zealand Banking Group (ANZ) monthly Job Advertisements. This data tends to have more impact when it's released ahead of the government employment data rather than after. On Tuesday all eyes will be on  the Reserve Bank of Australia (RBA) monetary policy decision, followed by RBA’s Governor Michele Bullock's press conference. The official cash rate is expected to remain steady at 4.35%.

Key Movers

In the US on Friday the US economy added 353,000 jobs in January, according to the Bureau of Labor Statistics, far outstripping expectations for 180,000 new payrolls. Jobs growth in January marked an increase on the December figure of 333,000, upwardly revised from an initial estimate of 216,000. The unemployment rate was unchanged at 3.7% in January. On top of that, average hourly earnings rose 0.6%MoM/4.5% YoY, whereas the market had been predicting only a 0.3% increase. This combination of strong jobs and wages with unemployment falling indicates clear strength in the US economy and even though inflation is still tracking towards 2% the Federal Reserve simply won’t consider cutting rates at the March FOMC meeting.
US shares powered higher, with the S&P 500 resetting its record high, fuelled by a stunning 20 per cent leap in Facebook parent Meta Platforms as well as a 7.9 per cent gain for Amazon. That came even as the yield on the US 10-year note spiked above 4 per cent. On the day, the S&P 500 was 1.07 per cent up to 4958.61; it peaked earlier at 4975.29. The Nasdaq Composite rose 1.7 per cent; the Dow Jones gained 0.4 per cent. Iron ore, oil and gold each were lower. Iron ore’s decline is reflected in part by poor margins for Chinese steel mills and subdued demand heading towards China’s February 10-17 New Year break, according to Mysteel.

Expected Ranges

  • AUD/USD: 0.6400 - 0.6600 ▼
  • AUD/EUR: 0.5900 - 0.6100 ▼
  • GBP/AUD: 1.9200 - 1.9400 ▲
  • AUD/NZD: 1.0600 - 1.0800 ▼
  • AUD/CAD: 0.8600 - 0.8800 ▼

Written by

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market. He started his foreign exchange career with OFX more than a decade ago, as a private dealer catering to individual clients. He later transitioned to the corporate sector, assuming the position of Corporate Senior Relationship Manager. What truly excites Brett is the opportunity to engage with people, supporting their business growth and sharing in their successes.