Home Daily Commentaries Aussie dollar trades above 66 US cents

Aussie dollar trades above 66 US cents

Daily Currency Update

The Australian dollar is slightly stronger this morning when valued against the Greenback currently trading at 66 US cents at the time of writing. The AUD/USD pair reached a one-and-half-week high around the 0.6625-0.6630 region on Friday. Last week the Australian Bureau of Statistics (ABS) released the monthly Consumer Price Index (CPI) figure that covers 62-73% of the weighted quarterly basket. The Reserve Bank of Australia (RBA) mandated target of 2 – 3% over the cycle is linked to the quarterly figure. Year-on-year CPI reaccelerated to 6.8% to the end of April according to the monthly gauge, well above forecasts of 6.4% and 6.3% prior. The reliability of the monthly CPI measure has been questionable since it was introduced last year but the RBA cited it when they hit the pause button on the hiking cycle earlier this year. They may acknowledge it this Tuesday when they meet again to decide on rates. Although investors eagerly await the RBA policy announcements on Tuesday for a fresh direction in the pair. The RBA is expected to hold rates at 3.85% in June but economists and money markets remain divided over its next move as lingering price pressures and recovering home prices suggest a hike may be needed while weaker activity and rising unemployment argue for a pause.

Key Movers

US President Joe Biden has signed legislation lifting the nation's debt ceiling and averting an unprecedented default on the federal government's debt. It was a decidedly low-key outcome to a months-long drama that unnerved finance markets both in the US and abroad. The legislation was signed with just two days to spare until the Treasury Department warned the country would start running short of cash, which would have sent shock waves through the US and global economies. The stand-off began when Republicans refused to raise the country's borrowing limit unless Democrats agreed to cut spending. Eventually, the White House began weeks of intense negotiations with House Speaker Kevin McCarthy to reach a deal.
On the data front Inflation in the US, The US Bureau of Labor Statistics (BLS) reported on Friday that Nonfarm Payrolls rose 339,000 in May. This reading surpassed the market expectation of 190,000 by a wide margin. April's reading of 253,000 also got revised higher to 294,000. The Unemployment Rate climbed to 3.7% from 3.4% in the same period, while the Labor Force Participation rate remained unchanged at 62.6%. Finally, annual wage inflation, as measured by the change in Average Hourly Earnings, edged lower to 4.3% from 4.4%. Markets are still pricing in a nearly 70% probability of the US Federal Reserve leaving its policy rate unchanged on June 13-14.

Expected Ranges

  • AUD/USD: 0.6500 - 0.6700 ▲
  • AUD/EUR: 0.6050 - 0.6250 ▲
  • GBP/AUD: 1.8700 - 1.8900 ▼
  • AUD/NZD: 1.0800 - 1.1000 ▲
  • AUD/CAD: 0.8750 - 0.8950 ▼