Home Daily Commentaries AUD creeps upward ahead of all-important US inflation print

AUD creeps upward ahead of all-important US inflation print

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Tuesday 13 February, 2024

Daily Currency Update

The Australian dollar outperformed through trade on Monday, consolidating a break above US$0.65, in what was otherwise a relatively quiet start to the week. With Asian markets closed in observance of Lunar New Year celebrations, price action through the domestic session was largely muted, while an absence of headline newsflow overnight ensured ranges remained intact.

US treasury yields held a narrow range and markets appeared content in maintaining positions ahead of an all-important US CPI print today. With pricing for a March rate cut fading significantly, an inflation read in line with expectations will end calls for imminent monetary policy change. A surprise to the downside will ensure hopes are kept alive, potentially helping the AUD extend off US$0.6540 and toward US$0.66.

Key Movers

Price action across majors was muted through trade on Monday as Asian markets were closed in observance of the Lunar New Year, while US and European markets offered little in the way of headline newsflow and Tier 1 data.

US equity markets edged higher, while treasuries maintained a narrow range and the USD is marginally higher trading above 104.10. Markets appeared content in managing positions ahead of tonight’s all-important US CPI update. We expect a small month-on-month increase of 0.3% and a year-on-year decline to 3.7%, one step closer to the Fed target at 2%.

A print in line or above expectations affords the FOMC scope to maintain the current setting and their patient approach to rate cuts all but eliminating the possibility of a March adjustment, while a miss to the downside will ensure there is still momentum behind calls for an imminent cut.

With implied monetary policy expectations key in controlling direction, tonight’s print will help shape direction through the week, while UK labour market and wages data will help drive Bank of England and UK rate action.

Expected Ranges

  • AUD/USD: 0.6480 - 0.66 ▲
  • AUD/EUR: 0.6000 - 0.6100 ▲
  • GBP/AUD: 1.9220 - 1.9480 ▼
  • AUD/NZD: 1.0600 - 1.0700 ▲
  • AUD/CAD: 0.8720 - 0.8820 ▲

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.