Home Daily Commentaries AUD shines in an otherwise modest session as all eyes turn to US CPI update

AUD shines in an otherwise modest session as all eyes turn to US CPI update

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Wednesday 10 April, 2024

Daily Currency Update

Australian dollar outperformance continued through trade on Tuesday amid an otherwise quiet trading backdrop. The AUD consolidated a break above US$0.66 testing intraday highs just short of US$0.6650 at US$0.6644. Stable business conditions, a moderate easing in consumer confidence and marginal change in cost components and inflation indicators were enough to push back expectations for an RBA rate cut, while the global reflation narrative and stronger commodity prices helped fuel gains. Having jumped 0.4% against the USD the AUD enjoyed strong gains against other major counterparts testing a break above US$0.61 euro cents, US$0.5230 British pence and pushing above 100 against the Japanese yen, touching levels not seen since November 2014.
With nothing of note on the domestic docket, our attentions turn offshore to US CPI data for March and the March Federal Open Market Committee meeting minutes. US yields and inflation expectations continue to be critical drivers in the near-term AUD value and we expect volatility through the overnight sessions and markets respond and adjust positions in response to the data updates.

Key Movers

Price action across major was largely muted through trade on Tuesday as investors sideline major bets ahead of tonight’s all-important US CPI update. US treasury yields edged lower pairing some of last week post Non-farm payroll gains while the USD tracked sideways against most counterparts, flat against the euro, yen and GBP and thus flat on an indexed level. Reports the Bank of Japan is considering raising its inflation forecast at its next policy meeting on April 26th had little market impact and the USD continues to test resistance on moves approaching ¥152. The euro traded between US$1.0850 and US$1.0890, while the pound tested a break above US$1.27 before tracking between US$1.2660 and US$1.2680 through the latter half of the overnight session.
Our attention now turns to US CPI inflation data tonight, with both headline and core CPI anticipated to increase at a moderated pace. Month-on-month growth should print near 0.3%, an upside surprise will likely diminish expectations for a June rate cut and could well lend the USD near-term support while a softer read affords the Fed some scope in bringing forward any planned rate adjustment. The Federal Open Market Committee minutes will prove useful in understanding the Fed's thinking and just how much expectations for monetary policy have changed.
In other news the Bank of Canada is expected to leave rates on hold, striking a dovish tone as inflation continues to moderate and employment conditions deteriorate.

Expected Ranges

  • AUD/USD: 0.6550 - 0.6700 ▲
  • AUD/EUR: 0.6020 - 0.6130 ▲
  • GBP/AUD: 1.9000 - 1.9200 ▼
  • AUD/NZD: 1.0880 - 1.1000 ▼
  • AUD/CAD: 0.8950 - 0.9050 ▲

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.