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Australian dollar hits highest level since December 2018

AUD - Australian Dollar

The Australian dollar is stronger this morning when valued against the Greenback reaching a high on Friday of 0.7366. A level that was last seen in December 2018 on the back of overall Greenback weakness and a surge in commodity prices. On Friday we saw the release of the Fed Chair Jerome Powell’s speech at the Jackson Hole Monetary Policy Symposium, where Powell said the U.S. central bank would seek to keep inflation at 2%, on average, so that periods of too-low inflation would likely be followed by an effort to lift inflation above 2% for some time.

Looking ahead this week, on Tuesday the Reserve Bank of Australia (RBA) will meet. The official cash rate is expected to remain at 0.25% however all attentions will turn to the RBA Rate Statement, which is focused on the future outlook. On Wednesday the Australian Bureau of Statistics will release the quarterly Gross Domestic Product (GDP) figures, which is forecast to be down -6.0%. On Thursday we will see the release of the monthly Trade Balance figures. Finally on Friday we will see the release of the monthly Retail Sales data, the primary gauge of consumer spending. From a technical perspective, the AUD/USD pair is currently trading at 0.7362. We continue to expect support to hold on moves approaching 0.7325, while now any upward push will likely meet resistance around 0.7400.

Key Movers

On Friday the greenback resumed its slide against a basket of major currencies in the wake of Fed Chair Jerome Powell’s remarks at the virtual Jackson Hole conference. U.S Fed Chair Jerome Powell said the U.S. central bank would seek to keep inflation at 2%, on average, so that periods of too-low inflation would likely be followed by an effort to lift inflation above 2% for some time. Over the last week we have seen both the dovish Federal Reserve policy and a sluggish U.S. economic recovery have accelerated the weakness in the Greenback. On the data front on Friday we saw the release of July Personal Spending and Personal Income, which increased by 0.4% and 1.9% respectively, while PCE inflation in the same month rose to 1.3% YoY, better than the 1.2% forecast. Looking ahead this week in the United States and on Thursday we will see the release of monthly Trade Balance figures. On Friday all eyes will be on the Employment figures, with the forecast for unemployment rate to come in at 9.8% down from previous 10.2% the previous month.

Expected Ranges

AUD/USD: 0.7250 - 0.7450 ▲

AUD/EUR: 0.6080 - 0.6280 ▲

GBP/AUD: 1.7980 - 1.8320 ▼

AUD/NZD: 1.0830 - 1.1030 ▼

AUD/CAD: 0.9550 - 0.9750 ▲