Home Daily Commentaries Aussie dollar continues to trade above US$0.66

Aussie dollar continues to trade above US$0.66

Daily Currency Update

The Australian dollar is slightly weaker this morning when valued against the Greenback, currently trading at 0.6629 at time of writing. It is possible the AUD/USD pair has entered a sideways trend, with a range high at the May 26 level of 0.6680 and a floor at 0.6591. Earlier this week the Aussie dollar was boosted by the inflation rate, which came in above expectations, rising to 3.6% in the 12 months to April. The consumer price index rose a touch from the year-on-year March figure of 3.5%, the Australian Bureau of Statistics said. Economists expected the monthly price gauge, which can be volatile and is not as comprehensive as the quarterly indicator, to moderate a little to 3.4% in April. The Reserve Bank of Australia remains alert to inflation risks as it works to bring inflation back within its 2-3% target range. Central bank forecasts have inflation taking until late 2025 to fall within the target range. Yesterday the total number of dwellings approved fell 0.3 per cent in April, after a 2.7 per cent rise in March, according to seasonally adjusted data released today by the Australian Bureau of Statistics (ABS). The value of total buildings approved fell 3.8 per cent, following a 13.8 per cent rise in March. The value of total residential buildings fell 3.2 per cent, comprised of a 3.8 per cent drop in new residential buildings and a 0.4 per cent rise in alterations and additions. Looking ahead today and the Reserve Bank of Australia will release the Private Sector Credit report. Borrowing and spending are positively correlated - consumers and businesses tend to seek credit when they are confident in their future financial position and feel comfortable spending money.

Key Movers

On the data front, yesterday in the United States real Gross Domestic Product expanded at an annual rate of 1.3% in the first quarter, the US Bureau of Economic Analysis' (BEA) second estimate on Thursday. This reading followed the 1.6% growth recorded in the first estimate and came in line with the market expectation. The update to the first quarter growth metric "primarily reflected a downward revision to consumer spending," per the BEA. Personal consumption in the first quarter grew at 2%, down from a prior reading of 2.5%. The slowdown in headline GDP comes at a time when markets have been sensitive to any readings, indicating that the economy may be running too hot for the Federal Reserve's liking, as inflation has proved stickier than expected. The concern is red-hot growth would boost price increases. Core Personal Consumption Expenditures (PCE) QoQ also ticked lower to 3.6% when markets expected a hold at 3.7%. With US growth and price inflation showing further signs of cooling off, investors are stepping back into hopes for rate cuts from the Federal Reserve (Fed).

Expected Ranges

  • AUD/USD: 0.6500 - 0.6700 ▼
  • AUD/EUR: 0.6000 - 0.6200 ▼
  • GBP/AUD: 1.9100 - 1.9300 ▲
  • AUD/NZD: 1.0700 - 1.0900 ▼
  • AUD/CAD: 0.9000 - 0.9200 ▲

Written by

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market. He started his foreign exchange career with OFX more than a decade ago, as a private dealer catering to individual clients. He later transitioned to the corporate sector, assuming the position of Corporate Senior Relationship Manager. What truly excites Brett is the opportunity to engage with people, supporting their business growth and sharing in their successes.