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Australian Dollar clinging on to 69c ahead of RBA tomorrow

AUD - Australian Dollar

The Australian Dollar remained within a tight range last week dipping as low as 0.6898 and a high of 0.6944, unfortunately local data disappointed with Building Approvals falling along with Private Capital Expenditure. In what is set to be a highly anticipated and watched RBA meeting tomorrow has also kept the lid on any real gains. Most analysts have predicted a rate cut of 0.25% to 1.25%, a dovish statement to follow could send the Aussie lower breaking 69c.

Data wise, on Friday the Reserve Bank of Australia advised that total credit expanded by 0.16% after seasonal adjustments, the smallest monthly increase since January 2013. Over the year, credit growth slowed to 3.7%, a level last seen in November 2013. Annual credit growth for housing grew at the slowest pace on record at 0.28% and over the year, credit for property purchases dipped to 4%, the weakest result on record. With some economist not expecting this result to improve either over the coming months.

Looking ahead, todays see the release of AIG Manufacturing Index, the April reading hit a six-month high of 54.8, will we see another expansion in May? The MI Inflation Gauge due at 11:00 AEST which helps analysts track inflation on a monthly basis and Company Operating Profits (11:30 AEST) which slowed in Q4 of 2018, Q1 of 2019 is expected to better with an estimate of 2.9%.

Key Movers

Tensions are still high between the U.S and China and no signs of any progress between the two countries. Interestingly Hu Xijin, editor-in-chief of the Global Times in China took a shot at Trumps latest announcement. He tweeted “Tariffs can not only block cheap products, but also curb illegal immigration! White House is so imaginative in using tariffs”. His comments came after an announcement by the U.S to slap a 5% tariff on all Mexican imports from June 10th. He also added that “Beijing will not wait passively”, indicating a restriction on rate earth exports, although, “rate earths” are not that rare with Australia and Canada being suppliers as well.

GBP/USD witnessed further selling touching a low of 1.2559, a level not seen since Jan 2019 on the back of politics and Brexit. Nigel Farage's Brexit Party won the election, sending the ruling Conservatives to the fifth place. Former foreign secretary Boris Johnson is still a favourite to become the next Prime Minister however he faces strong competition with former Brexit secretary Dominic Raab and Jeremy Hunt who is the current foreign secretary all hoping for the top job.

Expected Ranges

AUD/USD: 0.6880 - 0.6950 ▼

AUD/EUR: 0.6140 - 0.6230 ▼

AUD/NZD: 1.0560 - 1.0660 ▼

GBP/AUD: 1.8100 - 1.8340 ▲

AUD/CAD: 0.9300 - 0.9420 ▲