Home Daily Commentaries Aussie dollar remains steady trading around 64 US cents

Aussie dollar remains steady trading around 64 US cents

Daily Currency Update

The Australian dollar is steady this morning when valued against the Greenback trading above 64 US cents. The AUD/USD pair traded at a low of US$0.6380 as investors saw the United States Consumer Price Index (CPI) report for August as insufficient to encourage Federal Reserve (Fed) policymakers to raise interest rates one more time, in the rest of the year. The AUD/NZD pairing is taking a step down for Wednesday, back into familiar consolidation territory as the Aussie struggles to find meaningful momentum against its next-door neighbour the Kiwi. The AUD managed to squeeze past the NZ$1.0880 handle yesterday, but couldn’t keep a grip and has slumped back, now trading into the NZ$1.0860 region. The day’s low is currently marked at near NZ$1.0845.

Looking ahead today on the data front, investors await the labour market data for August, which will be published on Thursday. As per the expectations, Aussie employers recruited 23K job-seekers vs. 14.6 lay-offs recorded in July. The Unemployment Rate is seen unchanged at 3.7%. Tight labour market conditions could force Reserve Bank of Australia (RBA) policymakers to discuss more about resuming the policy-tightening spell.

Key Movers

Overnight, US headline inflation expanded at a 0.6% pace as anticipated by market participants. Core CPI (that excludes volatile oil and food prices) expanded by 0.3%, higher than estimates and July's reading of 0.2%. The US headline CPI, on an annual basis, accelerated to 3.6% from expectations of 3.6% and the prior release of 3.2%. Core CPI matched expectations of 4.3% in a similar period, remaining below the former reading of 4.7%. According to the CME Fedwatch Tool, traders see a 97% chance in favour of an unchanged monetary policy vs. a 93% chance before the US inflation data release for the September monetary policy meeting.

The pound weakened against the dollar on Wednesday after Britain's economy contracted at its sharpest rate in seven months in July as strikes and poor weather weighed on output. Sterling was down as much as 0.4% against the dollar at $1.2442, its lowest level since June 8. The UK economy contracted by 0.5% in July. Figures from the Office for National Statistics (ONS) showed a worse-than-expected contraction of 0.2% and the largest drop in monthly output since December 2022. The Bank of England has raised interest rates 14 times since December 2021, taking them to a 15-year high of 5.25%. Money market traders are pricing in around an 80% chance policymakers will raise interest rates again at next week's meeting and a 20% chance rates will remain on hold. Meanwhile, pricing for the terminal rate has come down to around 5.6%, from more than 6%.

Expected Ranges

  • AUD/USD: 0.6300 - 0.6500 ▲
  • AUD/EUR: 0.5870 - 0.6070 ▲
  • GBP/AUD: 1.9320 - 1.9520 ▼
  • AUD/NZD: 1.0725 - 1.0925 ▲
  • AUD/CAD: 0.8585 - 0.8785 ▲