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Sleepy start to the week sees AUD range bound through Monday

Tuesday 31 August, 2021

Daily Currency Update

AUD - Australian DollarThe Australian dollar edged lower through trade on Monday in what was a largely uneventful start to the trading week. Having broken back through 0.73 cents on Friday, the AUD crept toward intraday highs at 0.7315 before drifting downward to touch an overnight low at 0.7285. Despite the overnight correction the AUD appears well supported as the risk narrative remains largely positive, buoyed by expectations the Fed will maintain its emergency policy setting through the immediate short term. Investors enjoyed the flow on effects from Fed President Powell’s neutral commentary on Friday extending risk assets to yet another record high. With little of note on today’s macroeconomic calendar out attentions remain affixed to the broader global outlook. Having recouped the losses suffered following the sharp correction in risk demand earlier this month we are watching breaks above 0.73 to see if investors will extend the recovery toward 0.74/0.75 US cents. A lack of conviction persists across currency markets and the AUD remains vulnerable to ongoing near-term corrections. With risk still skewed to the downside we expect volatility over the coming weeks/months ahead of a broader commodity currency and AUD rebound toward the end of the year. Risks to this outlook remain the Pandemic and its shifting dynamic.

Key Movers

Price action across currency markets was largely muted through trade on Monday with majors tracking within two tenths of a percent through much of the day. The Dollar index edged ever so slightly higher as investors appeared content to square positions and recoup profits following last weeks risk on recovery. With little headline newsflow or macroeconomic data on hand to drive direction it really was a sleepy start to the trading week. A lack of conviction across currency markets has been evident of late with investors reluctant to extend moves in either direction. Our attentions now turn to Chinese PMI data for insights into the impact of the latest pandemic restrictions while US non-farm payroll and PMI data dominate the docket leading into the end of the week. With Fed President Jerome Powell highlighting the importance of a labour market recovery in guiding FOMC policy decisions we are keenly attuned to any deviation from expectation as a possible catalyst to spark direction.

Expected Ranges

  • AUD/USD: 0.7230 - 0.7330 ▼
  • AUD/EUR: 0.6120 - 0.6220 ▼
  • GBP/AUD: 1.8680 - 1.8990 ▲
  • AUD/NZD: 1.0350 - 1.0480 ▼
  • AUD/CAD: 0.9150 - 0.9250 ▼