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AUD Steady on Fed

Daily Currency Update

The AUD started off the week around the US$0.63 mark, but as we approached the US Federal Reserve (Fed) decision this Thursday morning, the currency has drifted lower to close Wednesday afternoon at the support level around US$0.6250. Slightly lower than expected Australian CPI figures saw the AUD drop around 25 points at time of publication in yesterday's APAC trading session. Futures priced in a 99.5% unchanged US Fed Funds Rate on Wednesday's close, as most analysts expected no change. There is mounting speculation in the treasuries market, with experts pricing in a 32.5% chance of a 0.25% cut in March.

Earlier this morning, the Federal Funds Rate was left unchanged, and accompanying commentary from Fed Chairman, Jerome Powell, mentioned he is in no rush to cut rates as he wants to see further progress on inflation. The AUD dipped slightly to open this morning around the US$0.6230 mark versus the Greenback. Canada’s rate decision overnight led to a cut to current levels of 3.00% from the previous 3.25%. Despite the cut, the CAD rallied slightly against the USD from a low of USDCAD 1.4472 to a current of USDCAD 1.4423.

Focus then moves to the ECB and their main refinancing rate decision later tonight.

Key Movers

Markets somewhat shrugged off the rate decisions overnight and this morning, they were mostly priced into the markets. Future talks of tariffs would increase volatility, however, the effectiveness of them is being questioned.

Another key mover this week has been the release of DeepSeek AI from China, which is said to have rivalled current leaders OpenAI and Meta AI. Tech stocks in the US have slid, especially Nvidia, which fell as much as 20% after the announcement. The reasons this has caused a stir is the efficiency, and improved performance DeepSeek has compared to the other two, at a fraction of the cost. It's especially timely as there are US chip export curbs on China. The export curbs were meant to prevent any sort of technological breakthrough such as DeepSeek. Consequently, investors have questioned accordingly by selling off tech as the breakthrough may lead to better competition and innovation.

In this instance, restrictive trade practices have in fact encouraged self-reliance and technological breakthroughs. The question now is whether future trade restrictions may encourage further innovation.

News today:

AU – Import Prices, RBA Bulletin

CH – Trade Balance, KOF Economic Barometer

CN – Bank Holiday

NZ – Trade Balance, ANZ Business Confidence

EU – French Consumer Spending, French Flash GDP, German Import Prices, Spanish Flash CPI, Italian Prelim GDP, German Prelim GDP, Italian Monthly Unemployment Rate, EU Prelim Flash GDP, EU Unemployment, Italian 10y Bond Auction, EU Main Refinancing Rate, Monetary Policy Statement, ECB Press Conference

US – Advance GDP, Unemployment Claims, Advance GDP Price Index, Pending Home Sales, Natural Gas Storage

Expected Ranges

  • AUD/USD: 0.6170 - 0.6260 ▼
  • AUD/EUR: 0.5960 - 0.6040 ▼
  • GBP/AUD: 1.9700 - 2.0100 ▲
  • AUD/NZD: 1.0950 - 1.1060 ▼
  • AUD/CAD: 0.8900 - 0.9040 ▼