AUD drifts back below US$0.67 in largely uneventful day
Wednesday 7 December, 2022
Daily Currency UpdateThe Australian dollar has tracked sideways through trade on Tuesday, bouncing between US$0.6680 and US$0.6750 in what was a largely uneventful day. Investors ignored the RBA’s last policy update for 2022, having already priced in the 25-basis point hike. With little change in the RBA’s narrative and forward guidance, the AUD reaction was, for lack of a better word, lacklustre, tracking within a 20-point range through and leading out of the policy announcement. Instead, market attentions remain affixed to the broader risk narrative. Further relaxation in China’s COVID management policies helped elevate risk appetite. At the same time, commentary from key banking leaders at Goldman Sachs and JP Morgan warned of a significant and hard recession in 2023. Markets appear content in carrying forward Monday’s risk-off mood without any real headline newsflow. We anticipate price action will remain well contained, leading into Friday’s US PPI update ahead of next week’s headline CPI print and Fed policy announcement.
Key MoversPrice Action across majors was well contained Tuesday as commodity currencies softened amid an extension in Monday’s risk of move and a downturn in Oil prices. The AUD and CAD underperformed, while the NZD looked to consolidate support at US$0.63. Amidst a stronger US dollar, the euro gave up a break above €1.05 to trade nearer €1.0450 on open this morning, while the GBP slipped below £1.2150, and the JPY allowed the USD to track back above ¥137.
Our attentions turn now to German industrial production data and the Bank of Canada’s latest policy decision. The market is split between a 25- and 50-point hike, and while betting favours a 25-point adjustment, surveys suggest it will be a close call. We anticipate CAD price action leading out of the policy announcement.
- AUD/USD: 0.6620 - 0.6780 ▼
- AUD/EUR: 0.6350 - 0.6430 ▼
- GBP/AUD: 1.8020 - 1.8320 ▼
- AUD/NZD: 1.0530 - 1.080 ▲
- AUD/CAD: 0.9080 - 0.9180 ▲