Home Daily Commentaries Australian dollar remains steady above US$0.68

Australian dollar remains steady above US$0.68

Thursday 15 December, 2022

Daily Currency Update

The Australian dollar is stronger this morning when valued against the US dollar, reaching an overnight high of US$0.6882 following the US Federal Reserve (Fed) monetary policy decision on Wednesday, with Jerome Powell raising rates by 50 basis points, as most analysts expected. However, the monetary policy statement remained unchanged from November’s. The AUD/USD is currently trading around US$0.6867 at the time of writing. The Reserve Bank of Australia (RBA) Governor Philip Lowe said in a speech yesterday the government this week had committed to legislation to give the RBA broader powers to regulate technology platforms offering payment services. The new powers over global technology companies providing payments through smartphones could be used to investigate whether restrictions Apple places on bank access to its digital wallet Apple Pay are anti-competitive. The RBA has consulted major digital wallet providers, including Apple, Google and Samsung, as well as banks and merchant terminal providers, to deliver a policy known as “least cost routing” (LCR) to merchants when customers pay with their mobile phones.
Looking ahead today on the local economic calendar, all eyes will be on the Unemployment Rate released by the Australian Bureau of Statistics. The Jobless rate is expected to remain steady at 3.4%. Finally, on Friday, we will see the release of the monthly Flash Manufacturing PMI.

Key Movers

Overnight the Federal Reserve Open Market Committee (FOMC) made the widely anticipated decision to raise the Federal Funds rate (FFR) toward 4.25-4.50%. A tight labour market and inflation spurred the US central bank’s decision. According to the Summary of Economic Projections, Federal officials predict a “terminal” rate average near 5.10%, with GDP anticipations at 0.5% for both 2022 and 2023; inflation is expected to reach 3.5% by 2023 before declining further in future years down toward the 2% US central bank, target. As measured by the DXY index, the US Dollar is high by 0.11% at the time of writing, making fresh gains on Powell’s hawkish remarks. US Treasury yields have also rallied, with the 10-year Treasury yield now printing a high of 3.56% on the day from 3.46% the low.
In the UK, we saw the release of the Office for National Statistics (ONS) in the United Kingdom (UK) witnessed inflation easing in November, from 11.1% to 10.7% YoY, and beneath estimates of 10.9%. The core Consumer Price Index (CPI) dropped from 6.5% to 6.3% YoY, remaining three times higher than the Bank of England’s goal. In the meantime, the Bank of England will reveal its monetary policy decision on Thursday, with most analysts expecting a 50 basis points rate increase which would take the Bank Rate to 3.5%.

Expected Ranges

  • AUD/USD: 0.6750 - 0.6950 ▲
  • AUD/EUR: 0.6350 - 0.6550 ▲
  • GBP/AUD: 1.8000 - 1.8200 ▲
  • AUD/NZD: 1.0550 - 1.0750 ▲
  • AUD/CAD: 0.9200 - 0.9400 ▲