Home Daily Commentaries Aussie dollar trades above 67 US cents 

Aussie dollar trades above 67 US cents 

Daily Currency Update

The Australian dollar is slightly stronger this morning when valued against the Greenback. The Aussie dollar reached an overnight high of US$0.6702 after the Federal Reserve’s decision due to broad-based dollar weakness. The Fed raised rates to 5.00% - 5.25%, the highest level since 2007, as expected. In the statement, the central bank signalled a potential pause. The Aussie dollar still holds bullish momentum amid elevated volatility. The next resistance is seen at Tuesday's high of US$0.6717, followed by $US0.6745/50. On the flip side, US$0.6675 is the immediate support, followed by US$0.6650.

On the data front, yesterday's seasonally adjusted Retail Sales for March rose 0.4% versus market expectations of witnessing a 0.2% steady growth number. Australia’s AiG Industry Index for March rose to 20.1 versus -6.1 prior, whereas the AiG Manufacturing and Construction PMIs for the said month dropped to -20.2 and -12.4 respective levels versus -5.8 and 5.6 priors in that order. S&P Global Services PMI for April improved to 53.7 versus 52.6 initial forecasts while the Composite PMI also rose to 53.0 from 52.2 first estimations for the said month. Looking ahead today and we will see Trade Balance for March and China’s Caixin Manufacturing PMI for the month of April.

Key Movers

Overnight in the United States, the Fed Chair Powell and Co. voted to raise rates to the 5.00% - 5.25% area, though tweaked its language regarding additional rate hikes. The Fed shifted to being data-dependent and will asses future decisions based on information about the economy, inflation, and the overall financial markets' behaviour. Federal Reserve officials added that ongoing tightening of credit conditions could aid the US central bank to achieve its 2% inflation goal. Despite removing some hawkish language from the monetary policy statement, policymakers reiterated that inflation is high and that the labour market is tight. Therefore, June’s meeting would likely be live, even though the futures markets had begun to price in the first rate cut in September. Concerning the balance sheet reduction, the Quantitative Tightening (QT) would continue as planned.

The Pound Sterling (GBP) posts new yearly highs against the US Dollar (USD) after the Federal Reserve (Fed) monetary policy meeting on Wednesday, lifting GBP/USD to new yearly highs close to 1.2600. Meanwhile, the Pound Sterling is underpinned by data for March which continued to show UK inflation above 10% for the seventh consecutive month. This suggests the Bank of England (BoE) is far from done with hiking interest rates in the UK, and may have to hike more than once to get inflation back under control. On the data front, yesterday in the UK we saw a 0.5% MoM rise in UK house prices in April when a negative figure had been expected, according to data provided by the UK’s biggest mortgage lender, Nationwide.

Expected Ranges

  • AUD/USD: 0.6550 - 0.6750 ▲
  • AUD/EUR: 0.5900 - 0.6100 ▼
  • GBP/AUD: 1.8800 - 1.9000 ▼
  • AUD/NZD: 1.0600 - 1.0800 ▲
  • AUD/CAD: 0.8950 - 0.9150 ▲