Home Daily Commentaries AUD unable to extend beyond 0.74 and appears well and truly range-bound

AUD unable to extend beyond 0.74 and appears well and truly range-bound

Daily Currency Update

AUD - Australian DollarThe Australian dollar underperformed through trade on Thursday giving up the post-CPI gains and falling back below 0.7350 US cents. With little economic data on hand to drive direction; investors sought to sell into the rally showing reluctance to extend beyond 0.7390/0.74 ensuring the AUD remains well and truly range-bound between 0.73 and 0.74 US cents. With Canberra, Melbourne and Sydney now all in lockdown and Sydney expected to remain so through the foreseeable future the economic impacts are becoming harder to ignore. Our attentions turn to next week's labour market report to better understand the true cost of the prolonged economic shutdown. An increase in the unemployment rate could force the RBA to reassess its position and unwind plans to taper QE stimulus measures adding further downward pressure on the AUD. With the Delta strain wreaking havoc throughout the country and around the world near-term pessimism and an extended global recovery mean hopes for an AUD rebound into the end of the year are fading. We expect the AUD to face further short-term pressures possible testing July lows before a recovery, come Q1/Q2 2022.

Key Movers

A lacklustre overnight session meant very little price action across major currencies as markets appeared content to sideline big bets in lieu of any headline data events. The USD index edged marginally higher, while the euro and Japanese yen tracked sideways on the day. The Great British pound gave up half a percent testing a break back below 1.38 despite a robust Q2 GDP data print. The UK economy grew 4.8% quarter-on-quarter with the annualised pace of growth nearing 20%. The stirring recovery in growth did little to drive market activity with investors instead seeing the uptick as a reminder of just how big the pandemic downturn was. With the UK again grappling with a new wave of COVID-19 infections as the Delta variant rips across the country there is concern the economic re-opening will not be maintained, especially as we move beyond the northern hemisphere summer and into the colder months. Our attentions today remain affixed to the global risk narrative with pandemic lead headwinds controlling market direction.

Expected Ranges

  • AUD/USD: 0.7290 - 0.7420 ▼
  • AUD/EUR: 0.6220 - 0.6290 ▼
  • GBP/AUD: 1.8720 - 1.8920 ▲
  • AUD/NZD: 1.0420 - 1.0520 ▲
  • AUD/CAD: 0.9150 - 0.9230 ▼