AUD edges lower, unable to retain Friday’s surge
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Daily Currency Update
The Australian dollar traded lower Monday, unable to retest Friday’s high, as markets adopt a more measured tone following the turmoil leading into last week's close. The AUD surged to highs just short of US$0.68 following Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium as markets scramble to price in a rate cut come September. Markets had largely priced in a rate adjustment but were seeking confirmation from Fed officials.Powell’s acknowledgement of market pricing and confirmation “the time has come” helped drive gains across equity assets and risk currencies. The AUD spent much of Monday tracking between US$0.6765 and US$0.6795. We expect it will carry a narrow range now through this week and leading into next week’s all-important non-farm payroll print.
US labour market conditions will go a long way in determining whether markets price a 25 or 50 basis point rate cut in September.
Key Movers
Price action was somewhat lacklustre through Monday given the fireworks seen on Friday as markets adopted a more measured wait and see approach. With little of note on the macro docket, profit-taking allowed the USD to claw back some of the losses it suffered following Fed Chair Jerome Powell’s Jackson Hole address. The USD DXY index edge up a fifth of one per cent, buoyed by a weaker, JPY, GBP, euro and AUD. The standout for the day being the Canadian dollar which extended last week's rally, advancing a further 0.16% on higher oil prices.With only second tier data on hand today we expect another day of consolidation ahead of US consumer confidence numbers tonight and Friday’s all important PCE price index print.
Expected Ranges
- AUD/USD: 0.6680 - 0.6800 ▼
- AUD/EUR: 0.6000 - 0.6100 ▼
- GBP/AUD: 1.9300 - 1.9600 ▲
- AUD/NZD: 1.0880 - 1.0980 ▲
- AUD/CAD: 0.9080 - 0.9180 ▼