Home Daily Commentaries Aussie dollar continues to trade below 0.74 U.S. cents

Aussie dollar continues to trade below 0.74 U.S. cents

Tuesday 22 March, 2022

Daily Currency Update

The Australian dollar is slightly weaker this morning when compared to the Greenback trading back below 0.74 U.S. cents. Overnight Aussie dollar extended its March rally to 0.7424 against the Greenback but finished the day little unchanged at around 0.7390. There were no locally scheduled releases yesterday. As expected Chinese central bank left lending rates unchanged but the market is expecting a cut to the reserve requirement ratio soon. The Chinese central bank is an outlier in the realm of major central banks, looking to ease policy while all others are looking to tighten. Looking ahead today and we will hear from the Reserve Bank of Australia (RBA) Governor Philip Lowe and if he hints that a change is coming, we could see a boost in the Aussie dollar. Later in the week on Thursday we will see the release of the Purchasing Managers' Index (PMI) a leading indicator of economic health which surveys around 400 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.  From a technical perspective, the AUD/USD pair is currently trading at 0.7387. We continue to expect support to hold on moves approaching 0. 0.7365 while now any upward push will likely meet resistance around 0.7440.

Key Movers

Overnight Chair Jerome Powell’s hawkish speech roiled financial markets sending Treasury yields spiking higher as the Federal Reserve looks poised to raise interest rates sharply to slow down inflation. Jerome Powell said the Federal Reserve would raise its benchmark short-term interest rate faster than expected in order to restrain growth and hiring, if it decides this would be necessary to slow rampaging inflation. Last week we saw the Federal Open Market Committee (FOMC) raise their official interest rate a quarter-point from near zero to a range of 0.25% to 0.5%. The two-year Treasury rate surged almost 20 points to its highest level since 2019, while the three-year and 10-year yields jumped by the most since March 2020 after the Fed chair said the central bank will take the “necessary steps” to get price increases under control.

Expected Ranges

  • AUD/USD: 0.7300 - 0.7400 ▼
  • AUD/EUR: 0.6600 - 0.6800 ▼
  • GBP/AUD: 1.7700 - 1.7900 ▲
  • AUD/NZD: 1.0650 - 1.0850 ▲
  • AUD/CAD: 0.9200 - 0.9400 ▲