Australian dollar continues to be restrained by Sydney lockdown extension
Daily Currency Update
The Australian dollar is slightly stronger this morning when valued against the greenback. The AUD closed at around 0.7370 yesterday slightly up for the day. On the data front yesterday we saw the release of the second-quarter inflation data which came in better than expected. On a year-over-year basis, the consumer price index (CPI) rose 3.8% versus a consensus estimate of 3.7%. A 0.8% q/q increase also beat expectations. The sharp rise in prices comes amid a sweeping new wave of COVID-19 lockdowns that have sent over half of the country’s population into lockdown in recent months. NSW Premier Gladys Berejiklian announced yesterday an additional four-week extension of Greater Sydney's lockdown in light of the state's COVID-19 crisis. What began as a two-week lockdown at the end of last month for the over 5 million people living in Greater Sydney will now stretch until at least August 28. NSW recorded 172 locally acquired COVID-19 cases in the last 24 hours.Looking ahead today and the calendar is fairly light with the only release Import Prices q/q. From a technical point of view, the risk remains skewed to the downside. The AUD/USD pair is currently trading at 0.7374. We continue to expect support to hold on moves approaching 0.7330 while now any upward push will likely meet resistance around 0.7400.
Key Movers
The main event overnight, which proved to be a bit of a fizzler, was the FOMC meeting in the US. The central bank committee indicated that progress had been made towards their goals and that this progress will continue to be assessed in coming meetings. Essentially, they have noted the strong rebound in the economy but are not ready to start winding back bond purchases and accommodative monetary policy settings. Speaking on inflation, they reiterated previous messaging that although prices have risen, the rises are reflecting ‘transitory factors’ and that the labour market ‘has a ways to go’.Although market impact was pretty muted, the USD index fell 0.2%, EUR/USD slipped back below 1.18 before rising back to 1.1840 afterwards. We also saw USD/JPY, which is a barometer for risk appetite have a similar roundtrip, initially falling below 110 to 109.95 before recovering to trade around 110.30.
Expected Ranges
- AUD/USD: 0.7250 - 0.7450 ▲
- AUD/EUR: 0.6120 - 0.6320 ▲
- GBP/AUD: 1.8750 - 1.8950 ▲
- AUD/NZD: 1.0500 - 1.0700 ▲
- AUD/CAD: 0.9130 - 0.9330 ▼