Home Daily Commentaries Another day , another loss; AUD extends decline through US$0.6350

Another day , another loss; AUD extends decline through US$0.6350

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.

| Thursday 12 December, 2024

Daily Currency Update

The Australian dollar tested new lows through trade on Wednesday, slumping below supports after reports surfaced that Chinese authorities plan to counter the impact of higher tariffs by allowing the yuan to weaken in 2025. The yuan plunged half a percent against the USD, dragging the AUD with it. Having opened just short of US$0.6390, the AUD tracked through US$0.6350 to mark a new post-election low of US$0.6338. It appeared the AUD would break through the April low, but the AUD was rescued by a paper released by the People's Bank of China arguing that the CNY had a solid foundation to handle tariffs, which helped to stabilise the CNY and lift the AUD back above US$0.6360.

Our attention now turns to domestic employment data. We expect a 25K uptick in employment and the unemployment rate should edge up toward 4.2%. Further easing in labour market conditions could bring forward interest rate cut expectations and add more weight to the AUD.

Key Movers

The USD was broadly stronger through trade on Wednesday, with the DXY index climbing another quarter of a percent, outperforming all major counterparts except for the Canadian dollar. As expected, the Bank of Canada issued a 50 point interest rate cut while shifting their forward guidance away from further rate cuts to a more balanced and data dependent approach. The prospect of a period of stable rates was enough to help lift the CAD against the USD. Across other majors, the GBP gave up just 0.15%, while the JPY and EUR were weaker. The euro traded below 1.05 and the USD advanced above 152 against the yen.

Our attention now turns to the European Central Bank. It is expected to deliver another 25-point rate cut this evening, while we look to the accompanying statement for further guidance as to the timing and trajectory of future hikes. The euro remains under pressure as geopolitical pressures and lacklustre growth across key euro areas weigh on investor demand.

Expected Ranges

  • AUD/USD: 0.6300 - 0.6500 ▼
  • AUD/EUR: 0.6020 - 0.6120 ▲
  • GBP/AUD: 1.9800 - 2.0100 ▼
  • AUD/NZD: 1.0950 - 1.1050 ▲
  • 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.