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The Aussie opens unchanged despite dovish tone in the US

AUD - Australian Dollar

The Australian Dollar opens relatively unchanged this morning at 0.7756, down from its Friday close of 0.7760. With little to digest at home, the Aussie took direction from offshore outperforming early in the week. Initially the Aussie advanced as the Greenback's recent resurgence faltered in the face of rising inflation concerns spurred on by a potentially overzealous stimulus package. With the proposed package some 9% of GDP on top of the 4% of GDP proposed before Christmas there are concerns that inflation will take off. Despite the concerns, the 1-year inflation expectations figure failed to meet expectations and only rose to 1.21%, albeit still almost a yearly high for the report. Closer to home, Melbourne again entered a COVID-19 related lockdown, although for a proposed 5 days this time. Ultimately the news capped the Aussie's movements on Friday, although the broader market was sluggish in general due to Chinese New Year celebrations and a looming public holiday today in the US, Presidents' Day. Moving into a new week, the Aussie is set to enjoy a very quiet domestic docket initially with direction again to be driven by the Greenback.

Key Movers

The US dollar again took centre stage last week with the Greenback's behaviour dictating broader market movements. Spurred on first by rising treasury yields and lower than expected inflation levels, the Greenback initially consolidated against a basket of currencies but ultimately weakened as Federal Reserve head Powell and later US Treasury Secretary Yellen both displayed a dovish tone. The Greenback was also sold-off throughout the week as inflation concerns crept into the stimulus conversation. Nevertheless, the US dollar opens this morning at 90.45 on the US DXY and is up 0.16 against the Japanese yen and 0.07% against the Swiss franc.

Across the Atlantic, the British pound turned out to be one of the better performers for the week after Q4 GDP rose by double market expectations at 1% q/q. Helped along by a softer Greenback and reports that the UK is starting to make headway in the infection rate, the Sterling rose an impressive 0.8% for the week and opens this morning at 1.3845.

Expected Ranges

AUD/CAD: 0.9773 - 0.9920 ▲

AUD/EUR: 0.6342 - 0.6437 ▲

GBP/AUD: 1.7713 - 1.7980 ▲

AUD/NZD: 1.0663 - 1.0824 ▲

AUD/USD: 0.7701 - 0.7818 ▲