The Aussie Starts the New Year on the defensive
Tuesday 4 January, 2022
Daily Currency UpdateThe Australian dollar starts the New Year on the back foot after a resurgent Greenback forced the commodity currency lower. Opening this morning at 0.7185, the Aussie dollar fell 1.17% to reverse the gains made over the last two weeks. The first trading day of 2022 started as a muted affair with little on the economic calendar to drive direction and thin trading volumes. This changed however during the American trading session as a number of factors saw the Greenback climb across the board. Initially the impetus came from US bond yields which soared to start the year and revived inflation related concerns. Adding further fuel to the fire is a general flight to safety after Omicron infection rates rose around the world, sparking fears in a potential surge in hospitalisations. There was also an element of profit-taking after risk-on currencies like the Aussie, enjoyed a two week end-of-year rally. Finally, Australian metal exports also took a hit with Copper down 1.5% and Gold down 1%. All these factors combined have the led the Aussie below 0.72 and to become the worst performer of the G10 FX market to start the year. Moving into the first week of the new year, markets continue to trade thinly ahead of a fresh catalyst from the economic calendar. The first opportunity is the ISM Manufacturing and Services PMI later in the week as well as FOMC minutes and ADP non-farm employment figures.
Key MoversThe Great British Pound was also on the defensive to start the year, falling 0.35% to open this morning at 1.3478. As with the Aussie and Kiwi, the Sterling fell victim to a solid US dollar comeback but found itself well supported around this level. The euro mirrored its neighbour across the channel but fell significantly more. The euro fell 0.7% to open this morning at 1.1293 with the US dollar and Omicron again being the main driving forces.
- AUD/USD: 0.7142 - 0.7229 ▼
- AUD/EUR: 0.6322 - 0.6398 ▲
- GBP/AUD: 1.8641 - 1.8866 ▲
- AUD/NZD: 1.04661 - 1.06565 ▲
- AUD/CAD: 0.9107 - 0.9216 ▼