Home Daily Commentaries Aussie dollar remains under pressure as markets pare rate cut expectations

Aussie dollar remains under pressure as markets pare rate cut expectations

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Tuesday 5 March, 2024

Daily Currency Update

The Australian dollar tracked lower through trade on Monday, sliding off early morning highs above US$0.6530 to test a break toward US$0.65. The AUD underperformed amid higher US treasury yields and lower commodity prices, yet continues to trade around key technical pivot points at US$0.6490/0.65.

While the AUD bounced off 2024 lows below US$0.6450 in mid-February, it has failed to build any meaningful recovery. Instead, it continued facing near-term pressures as markets pare expectations for US rate hikes and softness across key commodities weighs on demand.

With little headline data on hand today, our attention turns to Wednesday’s Q4 GDP update. A contraction in economic activity will support the RBA maintaining a neutral policy setting and all but eliminate another rate hike, ensuring the AUD maintains a negative yield bias through H1.

Key Movers

Despite an uptick across US treasury yields, there was little action across major currencies through trade on Monday. The DXY index traded sideways and has done so for the last 2 weeks as markets consolidate positions, having pared back expectations for central bank policy change.

A string of stronger data sets in the US and across Europe have pushed back the timing and trajectory of rate cuts. With little headline data on hand to drive direction, the euro and GBP outperformed, advancing against their major counterparts. EUR/USD edged higher while EUR/JPY looks set to make a break back above 163.7, re-testing the 2024 high, as investors unwind bets for a H1 ECB rate cut.

Another quiet macro docket suggests price action will again be well contained through Tuesday as we look to mid-level Japan inflation numbers and US services data for direction ahead of the ECB policy update Thursday and US non-farm payroll Friday.

Expected Ranges

  • AUD/USD: 0.6480 - 0.6580 ▼
  • AUD/EUR: 0.5970 - 0.6050 ▼
  • GBP/AUD: 1.9350 - 1.9550 ▲
  • AUD/NZD: 1.0620 - 1.0720 ▼
  • AUD/CAD: 0.8800 - 0.8900 ▲

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.

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