Range bound again; when will the market find conviction in a trend?
Thursday 3 June, 2021
Daily Currency UpdateAUD - Australian DollarThe Australian dollar offered little to excite investors Wednesday as price action across major currencies was largely muted. Analysts ignored Q1 GDP data as feed-in indicators proved correct and the final print wrote in largely as expected. The Australian economy grew 1.8% in the 3 months to March 31 and appears set to maintain a healthy recovery through quarters two, three and four. The steady print paves the way for the RBA to begin tapering QE and reduces the need to extend yield curve controls in July. Ordinarily, we’d expect a boost on the back of such a print but it appears the market is still lacking conviction, reluctant to break outside narrow trading ranges for fear of going against near term headwinds. The AUD bounced between 0.7715 and 0.7770 through Wednesday and appears unlikely to make a significant break outside this handle ahead of Friday’s US non-farm payroll report. With estimates for US labour market performance split across a wide range, there is some scope to suggest we may enjoy some long-awaited volatility in its aftermath.
Key MoversMovement across major currencies was largely muted through trade on Wednesday as markets continued to seek a catalyst to drive direction and underpin conviction in a broader market narrative. The Canadian dollar and Norwegian kroner outperformed most counterparts, buoyed by an uptick in oil prices. With global rates stagnant and little price action across equities, the absence of a broader trend ensures ranges remain narrow. The euro continued to struggle on extensions beyond 1.22 while the GBP fails to consolidate gains above 1.42, content to bounce between 1.4100 and 1.4200. Attentions today turn to a host of European and US PMI indicators. While we expect the market will ignore headline numbers, a deep dive into the sub-content, particularly rising input costs could provide an invaluable marker for ongoing inflation trends. That said, anything short of a shock outperformance will likely see currencies confined to recent ranges in the lead up to tomorrow US non-farm payroll print.
- AUD/USD: 0.7680 - 0.7790 ▼
- AUD/EUR: 0.6310 - 0.6360 ▼
- GBP/AUD: 1.8210 - 1.8420 ▲
- AUD/NZD: 1.0660 - 1.0750 ▲
- AUD/CAD: 0.9290 - 0.9390 ▼