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AUD/USD falls 0.5% on Friday

Monday 14 February, 2022

Daily Currency Update

The Australian dollar slumped 0.5% on Friday as a resurgent greenback took centre stage to close out the week. Aided by a flight to safety, the US dollar surged an impressive 0.5% against a basket of currencies (DXY), sending most of the major currencies into the red, including the Aussie. The AUD opens this morning on the back foot at 0.7130. Risk-off sentiment plagued global markets on Friday with pullbacks seen across bond and equity markets. The bond selloff, in particular, caused a measurable retreat from risk assets and commodity currencies with flows consequently going to safe havens such as Gold, the Yen, and USD. Amidst this environment, the AUD spent much of Friday oscillating within the 0.71’s but ultimately extended the sell-off from Thursday's three-week high of 0.7250 to hit a daily low of 0.7108. Despite the persistent weakness throughout the day the Aussie did find its feet at the close to clawing its way up to 0.7130. The Aussie now turns to a packed economic calendar for direction with proceedings set to start on Tuesday with FOMC Member Bullard speaking and the RBA’s Monetary Policy meeting minutes set for release.

Key Movers

The Great British pound eked out a small 0.05% rise against the greenback on Friday which in isolation would seem unremarkable. The gain however, within the context of a dominant USD and risk-off sentiment permeating global markets was impressive. Opening this morning at 1.3564, the GBP managed to preserve the lion’s share of last week’s rally on the back of the Bank of England's decision to raise the interest rate to 0.5%. While the decision is firmly in the rear-view mirror at this point, it has led to a bullish consolidation as well as a strong support level for the sterling. If anything, the risk-off tone has capped the pounds recent upsurge. Across the pond, the USD continues to trade on the assumption that we’re not too far away from an aggressive Fed monetary policy stance. Thursday’s red-hot inflation figures as well as Fed President Bullard's call for a 100BPS rate hike over the next three Policy Meetings have reinforced speculation that a rate hike is imminent. This in turn sent the 10-year US government bond rate beyond the 2% level for the first time since 2019.

Expected Ranges

  • AUD/USD: 0.7087 - 0.7172 ▼
  • AUD/EUR: 0.6257 - 0.6332 ▼
  • GBP/AUD: 1.8877 - 1.9105 ▲
  • AUD/NZD: 1.0660 - 1.0789 ▲
  • AUD/CAD: 0.9025 - 0.9134 ▲