Aussie dollar trades above 68 US cents
Thursday 11 May, 2023
Daily Currency UpdateThe Australian dollar is slightly stronger this morning when valued against the Greenback. The Aussie dollar rallied overnight to reach a high of US$0.6818 after the US April inflation data. The AUDUSD pair then pulled back after Wall Street’s opening bell. The AUDUSD is currently trading at US$0.6778. The NZDAUD pair continued to edge higher, testing above AU$0.9400 overnight and is currently just under that level. The broader risk backdrop hasn’t been helped by limited progress on the US debt ceiling issue. The Australian Dollar (AUD) continues to draw support from the Reserve Bank of Australia's (RBA) hawkish outlook, indicating that some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable time. Apart from this, the broader risk sentiment should provide some meaningful impetus to the AUDUSD pair and allow traders to grab short-term opportunities ahead of Chinese inflation figures, which are due during the Asian session on Thursday. On the local data front, and a quiet day ahead. The Melbourne Institute will release the Inflation Expectations report which looks at future inflation can manifest into real inflation, primarily because workers tend to push for higher wages when they believe prices will rise.
Key MoversData released in the US overnight revealed that the US Consumer Price Index (CPI) rose 0.4% in April, in line with expectations, and 4.9% YoY, slightly below the 5% of market consensus. The Core CPI grew 0.4% and the annual rate edged lower from 5.6% to 5.5%, both matching market consensus. Looking ahead, we will see the release of the April Producer Price Index (PPI) tonight. But the Core CPI data provided encouragement that some underlying pressures are easing, with rent increases below the past year’s average and services prices excluding housing and energy. The S&P500 was up around 0.3% overnight, driven by tech but with financials and energy. The latter was not helped by a near 2% drop in oil prices as data showed a build in US crude inventory, as demand concerns continue.
The Pound Sterling (GBP) rallied sharply versus the US Dollar (USD) after the release of US Consumer Price Index (CPI) data for April on Wednesday. The pair failed to hold onto its gains, however, and pulled back down to near the 1.2600 level during the latter part of the US Session. Looking ahead and the Pound Sterling will be impacted by the outcome of the Bank of England (BoE) policy meeting on Thursday. A 25 bps interest rate hike is now expected with almost certainty. What is less certain is the bank’s forward guidance, BoE Chairman Andrew Bailey’s comments in the press conference, and the distribution of member votes.
- AUD/USD: 0.6650 - 0.6850 ▲
- AUD/EUR: 0.6050 - 0.6250 ▲
- GBP/AUD: 1.8500 - 1.8700 ▼
- AUD/NZD: 10550 - 1.0750 ▼
- AUD/CAD: 0.8950 - 0.9150 ▲