Currency markets quiet as equities ignite
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Daily Currency Update
The Australian dollar opens this morning showing little net change on the same time yesterday, trading near US$0.6550. While there was plenty of activity across financial markets with equities and treasury yields both marking fresh highs for 2024, price action among major currencies was largely muted. With little domestic data on hand to drive direction, the AUD tracked within a narrow range early before finding support and pushing toward highs just short of US$0.66 amid a weaker dollar and improved risk sentiment. Markets then pared gains, forced to adjust expectations for the pace and timing of Fed rate cuts. Stronger than expected jobs data and consistent commentary from Fed officials have driven the market to align rate cut forecasts with those published by the Fed. Having touched intraday highs at US$0.6594, the AUD slipped back toward US$0.6550 leading into this morning’s open.With little of note on the global docket, our attentions turn to headline news flow and commentary from Fed officials for direction into the weekly close.
Key Movers
There has been plenty of action across financial markets through the last 24 hours with equities and treasury yields both marking 2024 highs. Such was the surge across equity markets that Japan’s Nikkei recorded its highest level since December 1989, while the S&P 500 jumped 1.8% and the Euro Stoxx 600 rose nearly 1%. Nvidia’s scorching hot earnings report drove gains across the tech sector and helped lift cyclical stocks. By comparison, price action across major currencies was dull, with little net movement between key majors. Markets pared back expected Fed rate cuts this year to 80 basis points, effectively matching the Fed’s view of three 25-point rate adjustments. Minutes from the Fed's last meeting affirmed the cautious approach officials have adopted in considering rate cuts. With US yields rising, the dollar found support, forcing the euro off highs above 1.0850 and back toward 1.0810, while the GBP traded as low as 1.2614, down off highs above 1.27 and the JPY gave up ground allowing the USD to push back above 150.50 for the first time since Wednesday last week.With the global macroeconomic docket light on headline data points our attentions turn now to more commentary from key Fed officials for direction into the weekly close.
Expected Ranges
- AUD/USD: 0.6480 - 0.6620 ▲
- AUD/EUR: 0.6000 - 0.6100 ▲
- GBP/AUD: 1.9100 - 1.9400 ▲
- AUD/NZD: 1.0550 - 1.0650 ▼
- AUD/CAD: 0.8800 - 0.8900 ▼