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Aussie dollar trades around 75 US cents on the back of higher commodity prices

Thursday 24 March, 2022

Daily Currency Update

The Australian dollar is stronger this morning when compared to the Greenback. On the back of higher commodity prices the Aussie dollar was the best performer overnight, trading stronger but meeting some resistance around the 0.75 mark. Overnight the Aussie dollar traded as high as 0.7507. Overnight crude oil prices jumped to fresh 2-week highs, while gold advanced within range to the upper end of its weekly range. Oil prices resumed their advances on Wednesday. The barrel of West Texas Intermediate surged to $115.37 a barrel, while Brent changed hands as high as $118.41 a barrel. Gold, on the other hand, advanced within range, posting intraday gains but holding below the weekly low at $1,941.24 a troy ounce. Looking ahead today we will see the release of the Purchasing Managers' Index (PMI), a leading indicator of economic health which surveys around 400 purchasing managers and 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 daily chart for the AUD/USD pair indicates that the risk remains skewed to the upside.  The AUD/USD pair is currently trading at 0.7497. We continue to expect support to hold on moves approaching 0.7450, while now any upward push will likely meet resistance around 0.7510.

Key Movers

Overnight we saw the release of the annual UK CPI inflation data. UK CPI inflation was stronger than expected at 6.2% y/y for the headline rate and 5.2% for the core, a fresh 30-year high. New government forecasts showed a projected peak of 8.7% at the end of the year, as higher energy and commodity costs feed through to consumer prices, the government’s fiscal forecast. The projection is above the Bank of England’s current outlook for about 8% and would be the highest since 1982, when the U.K. was still grappling with the aftermath of oil shocks in the 1970s. The Great British pound is the weakest of the majors overnight, down almost 0.6%, failing to strengthen after the strong CPI data, suggesting that the upside surprise was well-anticipated.

Expected Ranges

  • AUD/USD: 0.7400 - 0.7500 ▲
  • AUD/EUR: 0.6700 - 0.6900 ▲
  • GBP/AUD: 1.7500 - 1.7700 ▼
  • AUD/NZD: 1.0650 - 1.0850 ▲
  • AUD/CAD: 0.9300 - 0.9500 ▲