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Aussie slips below 0.71 despite wavering USD policy support

AUD - Australian Dollar

The Australian dollar edged lower through trade on Friday, giving up Thursday’s advance and sliding back below 0.71 U.S cents. With little of note on the domestic docket the AUD touched intraday lows at 0.7078 as markets shadowed haven flows, consolidating positions following the midweek run above 0.7150, reluctant to extend gains in the face of softening domestic economic conditions.

Since falling back below 0.72 on February sixth that AUD has struggled to break outside a 150-point band, trading between support at 0.7000/0.7020 and resistance at 0.7150. Despite a softening in US data sets and a dovish shift in Fed economic expectations investors appear reluctant to force the commodity led unit higher. A slowdown in domestic economic performance has amplified calls for the RBA to loosen monetary policy and cut rates throughout H2 2019 while global growth concerns weigh on demand for key exports. With little headline data on hand this week attentions turn to next weeks RBA rate statement for direction and forward monetary policy guidance. We expect the AUD to maintain recent ranges in the interim.

Key Movers

The USD enjoyed mixed fortunes when valued against key counterparts on Friday, closing lower against the Yen as risk appetite faded while advancing against the Euro and commodity led currencies despite a downturn in US manufacturing data. Policy support for the USD is beginning to waver as domestic data sets point to a slowdown in domestic economic fortunes and treasury yields signal mounting fears a recession may be around the corner.

The Pound rallied through trade on Friday After EU policy makers afforded Theresa May a two-week extension to the March 29 deadline if the embattled PM can win approval for her withdrawal deal. Brexit remains the sole narrative driving Stirling direction as May pushes for a clean divorce ahead of a final Parliamentary vote.

Expected Ranges

AUD/NZD: 1.0220 - 1.0380 ▼

GBP/AUD: 1.8250 - 1.9250 ▲

AUD/USD: 0.7020 - 0.7150 ▼

AUD/EUR: 0.6220 - 0.6330 ▲

AUD/CAD: 0.9430 - 0.9580 ▲