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Aussie subdued ahead of employment change print

AUD - Australian Dollar

The Australian dollar saw another day of range bound activity on Wednesday seeing intraday highs of 0.6854 following the surprise decision across the Tasman by the RBNZ in New Zealand to keep interest rates on hold at 1.00%.

Seasonally adjusted Wage Price Index figures came in at market expectations of 0.5% q/q as yesterdays figure showed a continuing theme of repressed wages despite sturdy employment figures released in October. Markets are still pricing a 50% chance of one further rate cut in Q1 2020 as wage growth continue to be a disappointing them for the local economy.

The Australian dollar opens this morning at 0.6833 ahead of Unemployment Change figures due for release this morning. We expect support levels to hold on moves approaching 68 US cents, while any upward push will likely meet resistance at 0.6865.

Key Movers

The U.S Dollar was higher overnight following the release of a favourable inflation print for the month of October in the United States. Consumer prices rose to a seven-month high of 0.4% m/m on a seasonally adjusted basis and to 1.8% y/y.

Federal Reserve Chairman Jerome Powell overnight testified before the Joint Economic Committee in Washington and hinted that rate cuts are unlikely and will keep interest rates unchanged over the coming months. Powell noted a stronger labour market and expansion of economy activity to boost the US Dollar Index (DXY) to overnight highs of 98.45.

Drifting away from Brexit themes in the UK, Inflation data decreased to 1.5% in October and a three year low as energy bill caps kicked in. House prices in the UK increased by 1.3% over the year to September 2019 and unchanged for the previous month. Cable was relatively unchanged following the release of data overnight pushing slightly lower to 1.2850 on open this morning.

Expected Ranges

AUD/USD: 0.6800 - 0.6865 ▼

GBP/AUD: 1.8600 - 1.9000 ▲

AUD/NZD: 1.0600 - 1.0710 ▼

AUD/EUR: 0.6180 - 0.6240 ▼

AUD/CAD: 0.9040 - 0.9100 ▲