AUD slides as French political headlines dominate direction
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Daily Currency Update
The Australian dollar tracked lower on Monday as French politics dominated the headlines. Euro softness allowed the USD DXY index to recoup losses endured through the end of last week, forcing the AUD back toward US$0.6460. Stronger China Caixin manufacturing data and robust domestic retail sales numbers did little to bolster demand for the AUD as investors appear reluctant to extend meaningfully beyond US$0.6550, amid the promise of fresh US tariffs.While politics continue to dominate direction and tariff talk will ensure the AUD remains well contained, our attentions turn to Fed commentary and current account data for direction through trade on Tuesday. Domestic GDP data on Wednesday and US non-farm payroll numbers on Friday headline the weekly macroeconomic ticket.
Key Movers
French politics dominated the headlines through Monday, driving the euro lower, while allowing the USD to edge higher. France’s National Assembly remains bitterly divided by this latest budget iteration. Marine Le Penn, leader of the far-right National Rally Party, doubled down on threats to propose a no-confidence vote should their demands for budget change not be met, while the finance minister pushed back announcing “We will not be blackmailed”.After last-minute budget concessions failed to elicit bipartisan support, French Prime Minister Barnier deployed special executive power to force through specific budget components rather than risk a vote. The move amplified discontent within the National Assembly and a no-confidence vote remains firmly in play. Should a vote be tabled, the French Government would collapse, forcing President Macron to appoint a new Prime Minister.
The euro fell steadily through Monday, marking fresh lows just above 1.0460 before finding support. Euro softness spilled into other European majors with the GBP giving up nearly three-quarters of a per cent, sliding below 1.2650. The yen was the only major to outpace the USD, buoyed by comments from the BoJ Governor that hint at a rate hike in the near future. Japanese rates pushed higher after the central bank chief said economic data is on track and would allow a rate adjustment in the near future.
Our attention turns now to commentary from topline Fed officials, JOLTS job data, Australian current account data and NZ terms of trade.
Expected Ranges
- AUD/USD: 0.6400 - 0.6550 ▼
- AUD/EUR: 0.6120 - 0.6250 ▲
- GBP/AUD: 1.9400 - 1.9700 ▲
- AUD/NZD: 1.0980 - 1.1100 ▼
- AUD/CAD: 0.9050 - 0.9150 ▼