AUD range-bound ahead of all-important US inflation update
Daily Currency Update
With little headline newsflow or data on hand to drive direction, it has been a relatively quiet start to the week. Investors appear content in simply waiting for tomorrow’s all-important US inflation update.The AUD showed little reaction to reports from China that new stimulus measures will be introduced, targeting investment in infrastructure. Copper and iron ore prices surged, yet the AUD tracked sideways, bouncing between US$0.6590 and US$0.6630. With the USD and other majors little changed, our attention turns to the 2024-25 budget update.
Our key focus will be the budget's outlook for inflation as a possible guide to future changes in RBA projections. Offshore our focus shifts to US PPI numbers ahead of tomorrow's all-important CPI print. The pace of disinflation has slowed through 2024 and this week’s read could prove pivotal in shaping expectations for Fed easing leading into the second half of the year.
Key Movers
There has been little price action across major currencies to start the week as investors seem to continue to wait on data that shapes central bank policy expectations. The Japanese yen has been the only notable mover down against the USD and other major counterparts. The USD has recovered off lows below 152, trading back above 156 on Monday.Investors appear convinced FX intervention is only temporary and seem willing to test the resolve of the Bank of Japan and Ministry of Finance, as underlying fundamentals continue to promote a weaker yen. We are closely monitoring moves toward 160 for any sign of intervention.
Expected Ranges
- AUD/USD: 0.6550 - 0.6650 ▲
- AUD/EUR: 0.6080 - 0.6180 ▲
- GBP/AUD: 1.8900 - 1.9100 ▲
- AUD/NZD: 1.0950 - 1.1050 ▲
- AUD/CAD: 0.8980 - 0.9080 ▲