Home Daily Commentaries AUD pushes back against attempts to send it toward US$0.62

AUD pushes back against attempts to send it toward US$0.62

Daily Currency Update

The AUD maintained a relatively narrow trading handle through Tuesday, consolidating above US$0.64 as markets took time to digest the pummeling inflicted over the last 3 weeks. With little headline news on hand, the AUD tracked between US$0.6405 and US$0.6455. China remains a critical focal point in determining near-term direction and with the People's Bank of China setting its strongest daily fix of the yuan relative to market estimates, making it more expensive for investors to short the yuan and with state banks employed to defend the currency the USD/CNH edged higher on the day, dragging the AUD with it. Having found support our attentions turn to global PMI data today. With risk aversion growing a downturn in global activity will likely exacerbate the risk-off narrative amid growing concern for the global growth outlook. We are keenly watching moves approaching US$0.6380 as a crucial support level preventing a deeper correction toward the October 2022 low at US$0.6200.

Key Movers

Price action across major currencies was largely muted Tuesday as investors appeared content in consolidating positions and taking stock against a quieter macroeconomic backdrop. The USD index was little changed as the JPY, AUD and NZD outperformed while the GBP and euro showed signs of weakness. An uptick in global gas prices and a near 10% jump in TTF futures added renewed inflation concerns for the euro area, weighing on the common currency and forcing a break below US$1.0850. Concerns stubbornly sticky inflation pressures, led by food and energy costs spiked Tuesday, elevating fears the European Central Bank will be forced to battle stagflation through Q4 and 2024. With the euro on the backfoot the GBP edge below US$1.2750, down 0.15% amid worries an uptick in gas prices will derail the newly established deflationary forces taking hold in the UK economy. With the Bank of England already expected to raise rates by an additional 75 points an uptick in price pressures will re-ignite growth concerns.
Our attention turns now to Global PMI data ahead of the Jackson Hole symposium on monetary policy.

Expected Ranges

  • AUD/USD: 0.6360 - 0.6480 ▲
  • AUD/EUR: 0.5870 - 0.5970 ▲
  • GBP/AUD: 1.9720 - 1.9990 ▼
  • AUD/NZD: 1.0750 - 1.0850 ▼
  • AUD/CAD: 0.8650 - 0.8750 ▲