Aussie dollar trades above 64 US cents
Daily Currency Update
The Australian dollar is slightly stronger this morning when valued against the Greenback. The Aussie dollar rose above 64 US cents during the Asian session on Monday. The uptick of the Aussie is supported by the weakening of the US dollar and the easing fear of China’s deflation. On the data front yesterday Chinese inflation figures improved in the month of August.The Chinese Consumer Price Index (CPI) rose 0.1% YoY, from a 0.3% drop in the previous month, compared to the 0.2% rise anticipated. The monthly figure was 0.3% as expected. Finally, the Producer Price Index (PPI) fell 3.0% YoY from 4.4% in July, in line with market consensus. The AUD/USD pair is currently trading at 0.6430 at the time of writing.
Looking ahead today, we will see the release of the Westpac Consumer Sentiment a survey of about 1,200 consumers that asks respondents to rate the relative level of past and future economic conditions, employment, and climate for major purchases. We will also see the release of the National Australia Bank (NAB) Business Confidence survey of about 350 businesses, which asks respondents to rate the relative level of current business conditions.
On Thursday all eyes will be on the release of the Employment data from the Australian Bureau of Statistics, which will measure the percentage of the total workforce that is unemployed and actively seeking employment during the previous month. This month we forecast the unemployment rate to remain steady at 3.7% while adding approximately 25.9k jobs.
Key Movers
Market investors will shift their attention to the US Consumer Price Index (CPI) for August on Wednesday. The monthly figure is expected to rise by 0.5%, while the core monthly figure is expected to remain at 0.2%. On Thursday, Australia’s employment data and US Retail Sales will be in the spotlight. The encouraging US economic data last week lends support to the higher for longer interest rate narrative in the US.The markets have priced in a 93% chance of a rate hold at the September meeting and a 43.5% chance of a rate hike at the November meeting, according to the market forecast. These events could trigger the volatility and give a clear direction to the AUD/USD pair.
In the UK overnight the Pound sterling (GBP) posted modest gains versus the US dollar (USD) late on Monday’s North American session after seesawing in an 80-pip range, though it stays afloat above the 1.2500 figure. The GBP/USD is trading at 1.2510, gaining 0.37%. the Bank of England (BoE) MPC member Catherine Mann stressed that it’s too soon for the BoE to end its tightening cycle and added that she “would rather err on the side of over-tightening” than the opposite.
Although it should be positive for the GBP/USD exchange rate, the August UK employment report on Tuesday could shift the pair’s direction. The GBP/USD pair is currently trading at 1.2505 at the time of writing.
Expected Ranges
- AUD/USD: 0.6330 - 0.6530 ▲
- AUD/EUR: 0.5900 - 0.6100 ▼
- GBP/AUD: 1.9340 - 1.9540 ▼
- AUD/NZD: 1.0750 - 1.0950 ▲
- AUD/CAD: 0.8630 - 0.8830 ▲