Home Daily Commentaries Aussie dollar continues to trade below 0.72 US cents

Aussie dollar continues to trade below 0.72 US cents

Daily Currency Update

The Australian dollar is slightly weaker this morning when compared to the greenback continuing to trade just below 0.72 US cents. The AUDUSD pair reached an overnight high of 0.7227 during the US trading session on the back of the positive tone of Wall Street as investors await the latest rates decision by the Federal Reserve tomorrow. The S&P 500 closed 2.1 per cent higher after a report showed inflation’s rapid acceleration took a pause at the wholesale level last month. The Dow Jones Industrial Average added 1.8 per cent and the Nasdaq composite soared by 2.9 per cent.

Yesterday on the data front we saw the release of the Q4 House Price Index, which was up 23.7% compared to the last quarter of 2021. The Reserve Bank of Australia released the minutes of its latest meeting. The document showed that policymakers are still convinced on keeping rates at record lows until actual inflation is sustainably within the 2 to 3% target band, holding on to their patient stance. Looking ahead and on Thursday all eyes will be on Australian Unemployment Rate figures released by the Australian Bureau of Statistics which forecast a fall in unemployment to 4.1% whilst adding roughly 40.3K new jobs.

Key Movers

The key movement overnight has been another plunge in oil prices. Brent crude fell as low as US$97.50 and is currently down 6% at US$100. On the data front US annual PPI inflation cracked the 10% mark for the first time this cycle, but the core measure was 0.3 percentage points weaker than expected at 8.4% y/y. The Empire State Manufacturing Index fell into negative territory, to reach minus 11.8, its lowest level in almost two years, indicative of some weaker economic momentum before the Fed even begins to raise rates.

All eyes today will be on the Federal Open Market Committee (FOMC) meeting which markets have anticipated the FOMC will enact an increase of a quarter-percentage point, or 25 basis points. From a market perspective, the key assessment will be whether the hike is “dovish” indicative of a cautious path ahead or “hawkish” in which officials signal they are determined to keep raising rates to fight inflation even if there are some adverse effects on growth.

Expected Ranges

  • AUD/USD: 0.7050 - 0.7250 ▼
  • AUD/EUR: 0.6450 - 0.6650 ▼
  • GBP/AUD: 1.8050 - 1.8250 ▲
  • AUD/NZD: 1.0550 - 1.0750 ▲
  • AUD/CAD: 0.9100 - 0.9300 ▼