AUD range bound again despite elevated commodity prices
Tuesday 18 May, 2021
Daily Currency UpdateAUD - Australian DollarThe Australian dollar maintained a narrow handle through much of Monday amid what was a largely lacklustre session across currency markets. Despite an uptick across key commodity prices with both copper and iron ore bouncing back toward record highs following last week's retracement, the AUD struggled to mount any real positive momentum. A risk-off backdrop remains intact and continues to offset the benefits of higher commodity prices while forcing the currency toward support at 0.7730. Having broken out beyond April’s narrow trading band earlier this month, the push and pull of short-term headwinds and long-term optimism appear to have dragged the AUD back toward said ranges as investors again search for a catalyst to drive direction and conviction. Our attentions today turn to the RBA policy meeting minutes. We expect few surprises given the meeting itself toed the line or expectation, however any guide on economic performance and expanded stimulus could prompt price action. We anticipate the AUD will remain range-bound between 0.768 and 0.78 through much of the week ahead.
Key MoversPrice action across the major currencies offered little to excite investors on Monday with the EUR and JPY enjoying only modest gains against the USD while the CAD and GBP both rose 0.3%. The CAD outperformed her commodity counterparts, buoyed by an uptick in oil prices with both WTI and Brent Crude climbing 1.5%. Expectations oil prices will continue to climb as Europe and the US re-open their economies could help fuel further CAD gains through the medium term. The Great British pound consolidated its push above 1.40, marking new intraday highs at 1.4147. Having underperformed through April, sterling appears set for a period of outperformance as the UK appears on track to immunise the majority of the adult population by July and the economic recovery/re-opening gathers pace. Our attentions now turn to Bank of England Governor Bailey as he outlines a path to quantitative easing to the House of Lords Economic Affairs Committee.
- AUD/USD: 0.7680 - 0.7800 ▼
- AUD/EUR: 0.6350 - 0.6420 ▼
- GBP/AUD: 1.7980 - 1.8420 ▲
- AUD/NZD: 1.0720 - 1.0820 ▲
- AUD/CAD: 0.9330 - 0.9430 ▼