AUD - Australian Dollar
The Australian Dollar fell through trade on Tuesday, succumbing to broad based USD strength in what was otherwise a largely muted news cycle. Slipping back below 0.71 the AUD touched intraday lows at 0.7084 as investors absorbed an uptick in US new home sales and attempted to position themselves ahead of today’s quarterly CPI print. Domestic inflation and price pressures are expected to remain soft through the first quarter, fuelling calls for an RBA rate cut through the later half of the year.
While the likelihood of immediate RBA policy change was reduced last week, following the largely robust labour market print, softness across price pressures will weigh on policy makers thought processes. The lack of upward pressure on prices will likely mean wage growth remains muted and the scope for a consumer led growth recovery continues to sit beyond our near-term reach. Our attentions today remain squarely affixed to the CPI print as a key marker governing longer term monetary policy projections. That said, we anticipate the AUD will continue to remain with recent range bounds, bouncing between 0.7000 and 0.7200.
The US dollar rallied through trade on Tuesday making year to date highs as investors opted into the worlds base currency following the extended Easter weekend. The dollar index jumped nearly four tenths of a percent to touch is highest level since June 2017 at 97.622 as new home sales reversed a recent downtrend to touch one and a half year highs. The uptick in home sales comes on the heels of stronger than expected retail sales and export growth through March, easing pressure on US growth concerns in the lead up to Friday Q1 GDP Print.
The Euro fell below 1.12 for the first time in three weeks before edging higher into the close while sterling’s slide continued as optimism surrounding Brexit talks between Prime Minister May and the opposition fade as May faces mounting pressure to quit. Slipping below 1.295 GBP volatility remains low and while we expect knee jerk reactions to emerging headlines ranges between 1.2900 and 1.32 should be maintained as long as the status quo remains intact.
0.7030 - 0.7180 ▼AUD/EUR:
0.6280 - 0.6350 ▼GBP/AUD:
1.8080 - 1.8380 ▲AUD/NZD:
1.0620 - 1.0680 ▼AUD/CAD:
0.9480 - 0.9580 ▲