AUD claws back losses as US upturn falters
Tuesday 16 May, 2023
Daily Currency UpdateThe Australian dollar advanced through trade on Monday, clawing back last week's losses to pitch back above US$0.67. With little headline newsflow on hand to drive direction, a marginal improvement in risk appetite appeared enough to lift the AUD off intraday lows near US$0.6620.
Having enjoyed its strongest weekly performance since February, the USD began the new week on the back foot, reversing gains as markets look to adjust technical positions ahead of key data updates and a potential end to debt ceiling negotiations.
With Biden and McCarthy locked in talks, there is growing hope an eleventh-hour deal will be struck, but with every day the US moves one step closer to default. Sustained uncertainty should ensure price action remains choppy through the near term.
Our attentions remain affixed to debt ceiling talks, while the RBA minutes, China monthly activity data, European and UK labour data, European GDP estimates, Canadian CPI and US retail sales round out a crowded macro ticket.
Key MoversThe US began the new week on the back foot, giving up gains won last week, amid a modest improvement in risk appetite as hopes a resolution to debt ceiling concerns will be found.
President Biden and House Speaker McCarthy remain locked in negotiations to raise debt limits and markets appear increasingly confident an eleventh-hour deal will be struck, despite McCarthy suggesting both sides remain “far apart”.
With the debt ceiling likely to remain in the headlines until a deal is struck (most likely in early June), price action will remain choppy as markets adjust technical support, resistance levels and positioning.
In other news the yen was the worst performer through trade on Monday, slumping amid the improved yield and rates backdrop while the euro and GBP edged upward on the heels of USD softness. Our attention remains affixed to debt ceiling talks, while European and UK labour data, European GDP estimates, Canadian CPI and US retail sales round out a crowded macro ticket.
- AUD/USD: 0.6630 - 0.6780 ▲
- AUD/EUR: 0.6120 - 0.6220 ▲
- GBP/AUD: 1.8580 - 1.8820 ▼
- AUD/NZD: 1.0680 - 1.0780 ▲
- AUD/CAD: 0.8980 - 0.9080 ▲