Home Daily Commentaries Aussie dollar rallies above 69 US cents

Aussie dollar rallies above 69 US cents

Daily Currency Update

The Australian dollar is slightly stronger this morning when valued against the Greenback. Overnight the AUDUSD pair managed to stage a recovery after dropping to a new YTD low at US$0.6811, which consequently cracked the 50, 100, and 200-day Exponential Moving Averages (EMAs). However, the AUDUSD pair reclaimed the 0.6900 figure and is trading at 0.6919, above its opening price by 0.53%.

Key drivers for the Aussie dollar some optimism over a potential recovery in China and support to Copper prices benefited the resources-linked Australian dollar. In addition, a subdued US dollar price action turns is a key factor acting as a tailwind for the AUDUSD pair. The fundamental backdrop still seems tilted in favour of bearish traders and warrants caution before positioning for any meaningful upside.

Looking ahead today and it's quite a busy schedule. We will see the release of the 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. We will also see the release of the Reserve Bank of Australia (RBA) Monetary Policy Meeting minutes. A detailed record of the RBA board's most recent meeting, providing in-depth insights into the economic conditions that influenced their decision on where to set interest rates.

Looking ahead for the rest of the week and tomorrow the Australian Bureau of Statistics will release the quarterly Wage Price Index which is a leading indicator of consumer inflation, when businesses pay more for labour, the higher costs are usually passed on to the consumer.

Key Movers

There were no scheduled releases in the US overnight as they celebrated Presidents' Day or officially Washington's Birthday. Last week the bets were reaffirmed by the US CPI and PPI data, which showed that inflation isn't coming down quite as fast as hoped. Moreover, several FOMC officials recently stressed the need to keep lifting rates gradually to fully gain control of inflation.

The markets seem convinced that the US central bank will stick to its hawkish stance and have been pricing in at least a 25 bps lift-off at the next two FOMC meetings in March and May. The prospects for further policy tightening by the Fed continue to act as a tailwind for the US dollar.

The Great British pound corrected from the low 1.19s on Friday, denting the bear's dominance ahead of a US holiday on Monday as traders squared up into the long weekend. At the time of writing, GBPUSD is trading near 1.2050 and remains in consolidation between the day's low of 1.2014 and 1.2056.

Looking ahead in the UK this week the PMI for February is the pick of the UK data calendar tomorrow. We forecast a modest improvement to 49.2. This may not be enough to lift GBPUSD with investors instead bracing for the FOMC minutes and US PCE inflation.

Expected Ranges

  • AUD/USD: 0.6800 - 0.7000 ▲
  • AUD/EUR: 0.6350 - 0.6550 ▲
  • GBP/AUD: 1.7300 - 1.7500 ▼
  • AUD/NZD: 1.0950 - 1.1150 ▲
  • AUD/CAD: 0.9200 - 0.9400 ▲