Home Daily Commentaries AUD rebound extends to a two month high

AUD rebound extends to a two month high

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.

| Monday 17 February, 2025

Daily Currency Update

The Australian dollar advanced Friday amid softer US retail sales data and dwindling tariff fears. While Trump's regime of reciprocity remains in sharp focus the threat of imminent tariffs has faded as officials’ analysis the US’s trade relationships with the intent of issuing country-by-country tariff programs. While talk of a reciprocal tariff system that accounts for VAT and GST tax systems has elevated fears Trump's establishment will quash Global growth markets are for now clinging to the belief the headlines are simply a bid to garner leverage in future trade negotiations and the result will not be nearly as crippling. With the USD on the back foot the AUD extended gains following weaker US retails sales. Having pushed through US$0.6350 the AUD touched its highest level since mid-December marking US$0.6368. A strengthening in the CNY helped underpin AUD gains as USD/CNY fell back toward 7.25.

With little of note on the macro agenda today our attentions turn to tomorrow’s RBA policy meeting. Market pricing suggests a 90% probability of a 25-point rate cut despite RBA officials suggesting any change in monetary policy move is still very much up in the air. We are keenly attuned to tomorrow’s policy announcement and surrounding commentary that offers guidance as to the trajectory of future rate adjustments.

Key Movers

The US dollar fell through trade on Friday, extending the week’s decline following weaker than anticipated US retail sales data. Having tracked lower through the Australasian session as markets sideline major tariff bets following reports Trump's regime of reciprocity will not begin until April. The US Dollar DXY index retreated, accelerating losses after the January US Retails Sales report. The print fell well short of expectations with headline sales down near 1% as cold weather, the California wildfires, and rising inflation concerns weigh on consumer sentiment and spending propensity. The softer print prompted an adjustment in implied Fed pricing with 40 points of cuts now priced in, up from 25 points prior to the print. Two- and Ten-year yields fell and ensuring the dollar closed the week 1.2% lower. With the USD on the back foot, the Euro traded through 1.05, while the British Pound pushed toward 1.2630 and the Yen pushed the dollar back below 153.

With US markets closed in observance of Presidents Day our attentions turn to Q4 GDP numbers from Japan as the loan headline item on the macroeconomic agenda.

Expected Ranges

  • AUD/USD: 0.6200 - 0.6400 ▲
  • AUD/EUR: 0.6000 - 0.6100 ▲
  • GBP/AUD: 1.9620 - 1.9950 ▲
  • AUD/NZD: 1.1050 - 1.1150 ▼
  • 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.