Aussie dollar falls below 65 US cents
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Daily Currency Update
The Australian dollar is slightly weaker this morning when valued against the Greenback as fresh inflation data showed softer-than-expected consumer price growth in January. Following the release of fresh inflation data, which showed consumer price growth remained steady at 3.4 per cent in January, money markets raised their bets on lower rates in 2024, and are now fully priced for a cut in September. The figure is the lowest annual inflation since November 2021 and shows a continued deceleration in the pace of inflation. The most significant price rises were housing, food and non-alcoholic beverages, alcohol and tobacco, insurance and financial services. Looking ahead, today we will see the release of the monthly Retail Sales figures which is the primary gauge of consumer spending, which accounts for the majority of overall economic activity. Finally, on Friday, the RBA will release the Index of Commodity Prices which is a leading indicator of the nation's trade balance with other countries because rising commodity prices boost export income. The AUDUSD pair is trading at 0.6493, at time of writing.Key Movers
On the US front, US Gross Domestic Product (GDP) grew at an annual rate of 3.2% in the fourth quarter, the US Bureau of Economic Analysis (BEA) said in its second estimate on Wednesday. The BEA reported in its advanced estimate the real GDP growth was 3.3%. ‘The increase in real GDP reflected increases in consumer spending, exports, state and local government spending, non-residential fixed investment, federal government spending, and residential fixed investment that were partly offset by a decrease in private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased.’ Looking ahead, all eyes will be on today's highly anticipated release of the Personal Consumption Expenditure (PCE) price index for January, as it serves as the Federal Reserve’s preferred barometer for inflation. Currently, markets are pricing in a 63% chance of a Federal Reserve interest rate cut by June, with the likelihood increasing to 84% for a cut by July. Furthermore, there’s an anticipation of approximately 85 basis points in cumulative interest rate reductions by December 2024, suggesting the market expects slightly more than three 25 basis point cuts.Expected Ranges
- AUD/USD: 0.6400 - 0.6600 ▼
- AUD/EUR: 0.5900 - 0.6100 ▼
- GBP/AUD: 1.9400 - 1.9600 ▲
- AUD/NZD: 1.0550 - 1.0750 ▲
- AUD/CAD: 0.8700 - 0.8900 ▼