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AUD range bound as lack of volatility hampers broader moves

AUD - Australian Dollar

The Australian dollar struggled to break outside recent ranges edging marginally lower in what was a relatively quiet start to the week across currency markets ahead of a loaded economic docket in the latter half of the week. With little of note on the domestic and international macroeconomic calendars the AUD remained at the mercy of offshore stimuli. US dollar gains forced the AUD toward support at 0.6850 touching intraday lows at 0.6856 before edging incrementally higher closing the day at 0.6870.

Attentions now turn to Thursday’s employment change and unemployment report as the primary domestic economic marker. Labour market strength remains a key driver governing RBA policy decision making and a break outside of expectations could prompt a break outside 0.6850 and 0.6930.

Key Movers

The US dollar advanced through trade on Monday, buoyed by recent strength across macroeconomic indicators. In what was a relatively quiet start to the week, with minimal volatility across most major crosses. Strength across key economic indicators highlighted the gap in economic performance between the US and Europe forcing the Euro below 1.11.

The Great British pound moved lower through trade on Monday following commentary suggesting Britain would not stick to EU trade rules at the conclusion of divorce proceedings and investors firmed up Bank of England rate cut bets. UK Finance Minister Sajid Javid amplified market concerns the UK will loose crucial access to European markets when suggesting Britain will seek new free trade agreements and abandon alignment with EU trade rules. The comments forced sterling back below 1.30 as attentions turn to Friday’s PMI data print. Friday’s data set remains the last key indicator that could influence next weeks Bank of England policy decision. With 65% of analysts pricing in a rate cut a strong read will likely have a bigger market impact as the likelihood the policy setting committee will remain firm increases.

The Chinese Yuan touched a six month high shrugging off slowing annualized growth printed Friday, holding onto optimism new trade agreements will begin to drive improvements in global growth.

Expected Ranges

AUD/USD: 0.6850 - 0.6930 ▼

AUD/EUR: 0.6150 - 0.6230 ▼

GBP/AUD: 1.8650 - 1.9020 ▲

AUD/NZD: 1.0350 - 1.0450 ▲

AUD/CAD: 0.8930 - 0.9030 ▼