Home Daily Commentaries Aussie dollar trades below US$0.67

Aussie dollar trades below US$0.67

Friday 16 December, 2022

Daily Currency Update

The Australian dollar is weaker this morning when valued against the Greenback. The Aussie dollar fell heavily falling from a high of 0.6869 to a low of 0.6681, down by over 2.5% on Thursday, in a move that started in Asia, accelerated in Europe and continued in New York trade. AUD/USD pair is now trading around US$0.67 over hawkish tones from a slew of central banks this week, including the Bank of England (BoE), the European Central Bank (ECB), and the Federal Reserve (Fed). Yesterday on the local front Australia's unemployment rate remained steady at 3.4%, despite the shock addition of 64,000 extra jobs over the past month. The Australian Bureau of Statistics (ABS) figures show the proportion of Australians in work or looking for work returned to a record high in November, with the participation rate at 66.8%. In a strong set of numbers, the underemployment rate also edged lower to 5.8%, and is now 2.9 percentage points below where it was before the pandemic. The low under-utilisation rate of 9.3% in November 2022 reflects the fact that there are now around 221,000 fewer unemployed people and 370,000 fewer underemployed people than in March 2020. Looking ahead today, the local economic calendar will see the release of monthly Flash Manufacturing PMI.

Key Movers

Overnight in the UK the Bank of England pushed up its base rate by 0.5 percentage points to 3.5% despite saying inflation has peaked and Britain is about to enter “a prolonged recession". The Bank hiked interest rates on Thursday for the ninth time in a year, to the highest level in 14 years, but told borrowers to prepare for fresh increases in the new year. Members of the Bank’s monetary policy committee (MPC) voted to increase the cost of borrowing after the consumer price index (CPI) in November showed annual inflation of 10.7%. Governor Andrew Bailey said a fall in CPI from 11.1% in October represented “the first glimmer” that inflation had begun to ease and he expected a rapid fall, “probably from the late spring onwards”. His comments, which appeared to show further rate rises could peak below forecasts of 4.5% by the end of next year, sent the pound tumbling against the dollar by 2 cents. The US dollar soared to fresh weekly highs against most major rivals, ending the day with substantial gains amid a risk-averse environment. On the local data front, the US reported November Retail Sales, which plunged by 5.9% YoY, while Industrial Production in the same period rose by 2.2%, below the 3.6% expected. The Greenback also benefited from hawkish US Federal Reserve Chairman Jerome Powell's hawkish comments reacting to the recent US Fed's decision.

Expected Ranges

  • AUD/USD: 0.6600 - 0.6800 ▼
  • AUD/EUR: 0.6200 - 0.6400 ▼
  • GBP/AUD: 1.8100 - 1.8300 ▲
  • AUD/NZD: 1.0450 - 1.0650 ▼
  • AUD/CAD: 0.9050 - 0.9250 ▼