Home Daily Commentaries AUD dollar unable to hold above 69 US cents

AUD dollar unable to hold above 69 US cents

Thursday 21 July, 2022

Daily Currency Update

The Australian dollar is slightly stronger this morning trading just below 69 US cents. Yesterday the AUD/USD pair reached a high of US$0.6930. The Australian dollar slipped below the US$0.69 figure after US housing data showed a deceleration in the housing market, meaning that recession fears are lingering in traders’ minds. Yesterday the Reserve Bank of Australia (RBA) Governor Philip Lowe said that further interest rate hikes are needed while stating that the bank needs to “chart a credible path back to 2-3%” inflation, in which unemployment persists at lows while the economy grows. The RBA has raised rates by 125 bps since May, and some analysts expect the RBA will move to the newest threshold of 75 bps in the August meeting. Looking ahead today and we will see the release of the National Australia Bank (NAB) Quarterly Business Confidence a survey of about 1,000 businesses that asks respondents to rate the relative level of current business conditions and expectations for the near and medium-term future. A leading indicator of economic health. On Friday we will see the release of the Flash Manufacturing Purchasing Managers' Index (PMI) a survey of about 400 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.

Key Movers

Overnight the UK headline inflation continues to rise, hitting 9.4% in June, slightly higher than expected.  The Bank of England expects headline inflation to reach 11% later this year after energy companies increase prices.  There wasn’t much reaction in either the GBP or UK rates, with the inflation numbers coming close to expectations and investors more focused on developments in Europe over the next 48 hours. The British pound is down around 0.2%, to US$1.1970, overnight. In the US overnight, US equities pushed higher again (S&P500 +0.6%, NASDAQ +1.5%) and the US 10-year Treasury yield pushed up to 3.04%. The Nasdaq rose on Wednesday after a positive forecast from Netflix added to largely upbeat second-quarter earnings from US companies against the backdrop of rising recession fears from the Federal Reserve's efforts to tame surging inflation. Netflix Inc's shares gained 3% after the company predicted it would return to customer growth during the third quarter while posting a smaller-than-forecast 1 million drop in subscribers in the second quarter.

Expected Ranges

  • AUD/USD: 0.6800 - 0.7000 ▲
  • AUD/EUR: 0.6700 - 0.6900 ▲
  • GBP/AUD: 1.7300 - 1.7500 ▼
  • AUD/NZD: 1.0950 - 1.1150 ▲
  • AUD/CAD: 0.8800 - 0.9000 ▲