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Aussie dollar higher overnight reaching six-week highs

AUD - Australian Dollar

The Australian Dollar rallied on Wednesday afternoon following positive leads from the release of Westpac Consumer Sentiment figures. Opening at 0.7123 against the US Dollar, the AUD rallied to an intraday high of 0.7175. Westpac Consumer Sentiment rose 1.9% for the month of April, with households showing optimism in the latest survey, boosted by the likelihood of tax cuts in the latest Federal Government Budget.

Furthermore, the Aussie was supported by comments in RBA Assistant Governor Guy Debelle’s speech at the Adelaide Business School yesterday afternoon. A more composed tone was noted as there expects to be decent strength in the economy with no need to introduce QE as per many G10 countries have done.

Overnight highs were seen at 0.7172 with little movement following the release of FOMC minutes this morning. From a technical perspective, the AUD/USD pair is currently trading at 0.7168. We continue to expect support to hold on moves approaching 0.7120 while now any upward push will likely meet resistance at the 72 US cent handle.

Key Movers

A number of key releases were seen overnight as both the ECB and Federal Reserve released their monetary minutes overnight. General weakness in the US Dollar was observed as the US core CPI print missed the mark of 0.2%, coming in at 0.1% for the month of March. 10-year yields moved lower to 2.476% with apparel prices the main catalyst for the downbeat print. The yearly headline core CPI print came in slightly lower at 2%

The Euro paired initial losses preluding the release of ECB minutes, taking advantage of USD weakness overnight. The minutes release pointed towards a steady approach to interest rate decisions this year with no rate hikes expected in 2019. EUR/USD sits this morning at 1.1275.

The release of FOMC minutes for the month of March was released early this morning where it was signalled there would be a pause in interest rate rises for the time being. A more patient approach is to be taken as the dot plot showed no rate increases for 2019. GDP levels were revised downwards and is expected to pull back from its recent pace. With global growth being a major concern for markets as of late, the CME fedwatch tool is now pricing a 40% chance that the next move by the Fed will be a cut by January 2020.

Thursday looks to be another busy day as investors focus their attention to China as both CPI and PPI figures are due for release. Several FOMC members are due to speak overnight as traders look for any further clues on their stance towards future monetary policy decisions.

Expected Ranges

AUD/USD: 0.7100 - 0.7200 ▲

AUD/EUR: 0.6300 - 0.6400 ▲

AUD/NZD: 1.0540 - 1.0650 ▲

GBP/AUD: 1.8000 - 1.8500 ▼

AUD/CAD: 0.9500 - 0.9600 ▲