Aussie dollar trades below 0.71 U.S. cents
Monday 7 February, 2022
Daily Currency UpdateThe Australian dollar was trading below 0.7100 against the greenback heading into the close on Friday. The AUD/USD closed the week down from a weekly high of 0.7167 on Thursday, when the European central bank came out with a hawkish monetary policy decision, pushing the greenback lower across the board. We continue to see a slow economic recovery amid the spread of Omicron. Last week the Reserve Bank of Australia (RBA) decided to maintain rates at record lows and its monetary policy unchanged in its February meeting, and the RBA statement indicated that “the Board judged that it is too early to conclude that inflation is sustainably in the target range,” a dovish stance that prevented the Australian dollar from rallying.
Looking ahead this week and on Monday we will see the release of the January AIG Performance of Services Index, ANZ Job Advertisements, and monthly Retail Sales figures. On Tuesday we will see the release of the January TD Securities Inflation and NAB’s Business Confidence for the same month. Later in the week, the country will release February Westpac Consumer Confidence and Consumer Inflation Expectations for the same month. From a technical perspective, the AUD/USD pair is currently trading at 0.7066. We continue to expect support to hold on to moves approaching 0. 0.6966. A breach of these levels would open the door to further Australian dollar weakness.
Key MoversOn Friday we saw the release of an upbeat US employment report. The US managed to add 467K new jobs in the month of January, more than the 150K expected. The unemployment rate was up from 3.9% to 4%, but the participation rate increased to 62.2% from 61.9% in December. The upbeat readings sent investors back as the greenback traded higher, as they were reminded of how the Federal Reserve has by far the most aggressive tightening program in town at the moment. The US employment report showed that average hourly earnings rose by 5.7%, exerting further pressure on the Fed, as higher wages equals elevated inflation. Furthermore, the unemployment rate touched 4.0%, a tenth more elevated than the 3.9% estimated. Looking ahead this week the US will publish the final estimate of the January Consumer Price Index and the preliminary estimate of the February Michigan Consumer Sentiment Index next week.
- AUD/USD: 0.6950 - 0.7150 ▼
- AUD/EUR: 0.6050 - 0.6250 ▼
- GBP/AUD: 1.8850 - 1.9050 ▲
- AUD/NZD: 1.0550 - 1.0750 ▲
- AUD/CAD: 0.8900 - 0.9100 ▲