Daily Currency Update

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AUD/USD stronger but struggles to break 0.74

AUD - Australian Dollar

Friday’s session saw the Australian dollar rise from 0.7370 to test the 0.7400 handle as US equity markets continued their ascent. The risk on mood saw the USD fall across the board, allowing the Australian Dollar to benefit however with the NZD also rising strongly, the AUD/NZD cross only rose 20 points from 1.0500 to 1.0520.

Looking to the day ahead, domestically we have company profits data for Q3 and the Melbourne Institute’s inflation gauge¬ to set the direction for the week. Some analysts are forecasting a 6% rise in Q3 company profits after we saw a 15% surge in Q2, largely resultant of the unprecedented fiscal support measures. Across the pond we will have ANZ business confidence numbers before the increasingly important Chinese manufacturing PMI data is released.

We expect the Chinese PMI data to set the tone for the Australian Dollar for the week ahead. A strong release or a continued rise in risk sentiment, could see the domestic unit test 0.7415 against the greenback.

Key Movers

Friday’s session was pretty quiet globally with not much in the form of news after the thanksgiving holiday in the US. As we touched on above, we did see the US Dollar index retreat 0.2% as equity markets rose. Interestingly, the positive risk sentiment didn’t extend into rates markets as bond yields also fell, suggesting some cautiousness in the market as Covid cases persisted.

EUR/USD was able to rise 0.4%, taking it closer to the key psychological level of 1.20. The GBP was the worst performer on the day, falling 0.5% to 1.3310. Without a clear catalyst, the sharp fall could be resultant of cautiousness from investors about Brexit negotiations as the year end deadline nears.

Expected Ranges

AUD/USD: 0.7310 - 0.7415 ▲

AUD/EUR: 0.6150 - 0.6200 ▲

GBP/AUD: 1.7900– 1.8200 ▼

AUD/NZD: 1.0500 - 1.0600 ▲

AUD/CAD: 0.9510 - 0.9620 ▲