AUD marks new 2025 high as eyes turn to the RBA
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Daily Currency Update
With US markets closed in observance of Presidents Day, price action was largely muted and the AUD traded within a narrow range. Having marked a new 2025 high at US$0.6373, the AUD bounced between US$0.6350 and US$0.6370, as markets sidelined major bets ahead of today’s all-important RBA policy announcement. We expect the RBA will cut rates by 25-basis points but acknowledge it is a closer call than market pricing suggests. Inflation is still above the RBA’s 2-3% target band and strength across the labour market does afford the RBA scope to maintain its current policy setting.With that in mind, we expect a hawkish cut, wherein policymakers lower rates but promise to maintain restrictive policy and give little guidance on the timing and trajectory of further easing. Markets are divided as to how many times the RBA will lower rates through 2025 so the tone of today’s policy meeting will prove pivotal in shaping rate expectations and near-term AUD direction.
Key Movers
The yen was Monday’s mover, up a little more than half a per cent against the USD, forcing the dollar back below 151.50. Q4 GDP data printed stronger than expected, supporting calls for the Bank of Japan to continue lifting rates through 2025. Markets are now pricing for rates to rise to 1% by the end of the year, their highest level in 15 years. With US markets closed for Presidents Day, price action across other majors was largely muted.The euro tested a break above 1.05 but was unable to sustain the move, while the British pound pushed through 1.26, touching intraday highs just short of 1.2635. With the USD on the back foot last week, our attentions turn to UK Labour Data, Canadian CPI numbers, Germany’s ZEW survey and commentary from key Fed officials.
Expected Ranges
- AUD/USD: 0.6200 - 0.6400 ▲
- AUD/EUR: 0.6000 - 0.6100 ▲
- GBP/AUD: 1.9600 - 1.9950 ▲
- AUD/NZD: 1.1000 - 1.1150 ▼
- AUD/CAD: 0.8950 - 0.9050 ▲