Home Daily Commentaries Aussie dollar continues to hold above 75 U.S. cents

Aussie dollar continues to hold above 75 U.S. cents

Daily Currency Update

The Australian dollar continues to hold above 75 U.S. cents an market sentiment remains surprisingly upbeat given the ongoing war in Ukraine and central banks’ push towards tighter monetary policy. Locally on the data front yesterday we saw the release of the Purchasing Managers' Index (PMI) a leading indicator of economic health which surveys around 400 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.  Australia’s private sector recorded a second straight month of growth. Private sector output and demand both expanded at solid rates leading to higher employment levels. However supply constraints worsened contributing to a record price inflation. Overall business confidence fell to the lowest level in almost two years.

Looking ahead today and there are no scheduled releases. From a technical perspective, the daily chart for the AUD/USD pair indicates that the risk remains skewed to the upside. The AUD/USD pair is currently trading at 0.7510. We continue to expect support to hold on moves approaching 0.7466 while now any upward push will likely meet resistance around 0.7530.

Key Movers

The key mover in the market overnight was the weakness in the Japanese Yen. The USD/JPY pair is up around 1% from yesterday and has broken above 122 for the first time since late 2015. The recent appreciation in USD/JPY has been primarily driven by the surge in US Treasury yields which, along with the Bank of Japan holding their official cash rates has led to a sharp widening in US-Japan interest rate differentials. The Japanese Yen has been on an astounding run of weakness over the past two weeks, with multi-year highs printing in all of USD/JPY, AUD/JPY and CAD/JPY, as other economies gear up for rate hikes to fight inflation. The Australian dollar is currently stronger this morning when valued against the Japanese Yen trading at 91.82. While the NZD/JPY has reached 85, its highest level since mid-2015.

Expected Ranges

  • AUD/USD: 0.7400 - 0.7600 ▲
  • AUD/EUR: 0.6700 - 0.6900 ▲
  • GBP/AUD: 1.7400 - 1.7600 ▲
  • AUD/NZD: 1.0650 - 1.0850 ▲
  • AUD/CAD: 0.9300 - 0.9500 ▲