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Aussie dollar weaker ahead of RBA monetary policy meeting

AUD - Australian Dollar

The Australian dollar is slightly weaker this morning when valued against the Greenback, opening trading a few pips above the 0.6700 figure, largely confined to the lower half of Friday’s trading range. The Aussie dollar still under pressure from the ongoing US-China trade war with US President Donald Trump threatening to increase current tariffs on US$250 billion of Chinese imports from 25% to 30% from 1 October. Currency experts anticipate the trade war will continue to cause the Chinese yuan to fall, dragging the Aussie down with it, which is also at decade lows.

Looking ahead today and all eyes will be on the Reserve Bank of Australia (RBA) monetary policy meeting at 2.30pm AEST. Market expectations largely anticipate the RBA to keep the cash rate on hold at 1.0%. Furthermore, policymakers are expected to reiterate that they are open to further cuts if needed. On Wednesday, we will see the release of Q2 Gross Domestic Product at 11.30am AEST. Prime Minister Scott Morrison said yesterday he expected national accounts data due on Wednesday to show the June quarter had been "very difficult".

From a technical perspective, the AUD/USD pair is currently trading at 0.6717. We continue to expect support to hold on moves approaching 0.6700 while now any upward push will likely meet resistance around 0.6750.

Key Movers

It has been a quiet start to the week with the US public holiday (Labor Day). Therefore all attentions turned on the United Kingdom as election speculation mounts before Brexit showdown. The Pound Sterling fell sharply on Monday against its major counterparty rivals as UK Prime Minister Boris Johnson summoned his ministers for an emergency meeting, fuelling expectations the prime minister was preparing to call a snap election should lawmakers this week vote to delay Brexit. Reports overnight indicated that an election could be called as early as Wednesday. On the release front yesterday in the UK August Markit Manufacturing PMI fell to 47.4 from 48, printing its lowest reading in over seven years. This Tuesday, the macroeconomic calendar includes the August Markit Construction PMI, foreseen at 45.9 from the previous 45.3. From a technical perspective, the GBP/USD pair is currently trading at 1.2065. We continue to expect support to hold on moves approaching 1.2040 while now any upward push will likely meet resistance around 1.2130.

Expected Ranges

AUD/USD: 0.6600 - 0.6800 ▼

GBP/AUD: 1.7850 - 1.8050 ▼

AUD/NZD: 1.0550 - 1.0750 ▼

AUD/EUR: 0.6000 - 0.6200 ▼

AUD/CAD: 0.8850 - 0.9050 ▼