Home Daily Commentaries AUD finally finds support but not before testing a break below US$0.62

AUD finally finds support but not before testing a break below US$0.62

Daily Currency Update

The Australian dollar edged higher through trade on Thursday, finding support after testing new lows below US$0.62. Having collapsed following the Fed’s hawkish cut on Wednesday, the AUD tested a new 2-year low of US$0.6199 before supports kicked in and helped lift the AUD back toward US$0.6250. With little on the domestic ticket, offshore drivers again controlled direction and the AUD found support in a stronger CNY fixing. The Peoples Bank of China continue to keep a strong hold on the yuan to avoid a rapid and steep depreciation and prevent a move through US7.30. Having traded near US$0.67 leading into the US presidential election, the AUD has suffered a sharp and dramatic correction through the last two months of 2024. Unfortunately the outlook remains bearish moving into 2025 as the uncertainties and vagaries of a Trump administration cast a pall across global trade expectations and China’s growth outlook. We are keenly attuned to any commentary over the holidays that hints to tariffs and trade policy and expect volatility will continue leading into and after the January 6 inauguration.

This is our last market update for 2024. A huge thank you to all readers for your support this year. Have a happy and safe holiday. We will be back in mid-January.

Key Movers

The USD DXY Index rose again through trade on Thursday, extending its post FOMC/Fed upturn. Gains were largely attributed to broader JPY weakness after Bank of Japan Governor Ueda dented market expectations a rate hike may be coming in January. Ueda noted “it will take some time to see the full picture of recent wage negotiations and the impacts of Trump Administration”. While data continues to support a rate adjustment, officials seem wary of moving too quickly. The yen fell sharply following the meeting, with the USD nearly 2% higher, pushing up through 157.50 and marking a fresh 5-month high. The Great British pound is also lower after the Bank of England policy meeting saw three members move against the majority and call for a rate cut. Markets lifted expectations for 2025 price cuts, but with Governor Bailey announcing “a gradual approach to future interest rate adjustments remains right,” movement across yields was contained. The GBP moved half a percent lower and is now trading back near 1.25 down from 1.2630 leading into the policy meeting.

Our attentions turn now to the US PCE deflator report as a key marker of inflation, while NZ trade and consumer confidence data, Japan CPI and UK retail sales number round out the ticket.

Expected Ranges

  • AUD/USD: 0.6100 - 0.6300 ▲
  • AUD/EUR: 0.5950 - 0.6080 ▲
  • GBP/AUD: 1.9850 - 2.0300 ▼
  • AUD/NZD: 1.0980 - 1.1120 ▲
  • AUD/CAD: 0.8920 - 0.9020 ▲

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.