Home Daily Commentaries Rebound continues; AUD eyes 0.73 US cents amid renewed risk-on agenda

Rebound continues; AUD eyes 0.73 US cents amid renewed risk-on agenda

Daily Currency Update

AUD - Australian DollarThe Australian dollar continued its recovery through trade on Wednesday edging closer to 0.73 US cents as investors extended the risk on agenda. In what was largely a quiet day across financial markets, equities marked new record highs and commodities continued their resurgence. Brent Crude Oil advanced a further 2%, pushing through $72 a barrel and looks set to recoup all of last week’s risk-off losses while copper, iron ore and other key commodities pushed higher. Having met some resistance on moves beyond 0.7250, the AUD gapped higher overnight reaching 0.7280 before edging marginally lower into this morning’s open. Sentiment continues to drive direction and as long as the pandemic continues to disrupt normality and the global economic engine, we expect the AUD and commodity currencies will enjoy ongoing periods of volatility. Having shrugged off last week’s risk-off push, the AUD appears well-supported for now. Our attentions turn to Fed chair Jerome Powell and the Jackson Hole symposium on monetary policy as a key marker for direction leading into the weekend.

Key Movers

The US dollar remained on the back foot through trade on Wednesday giving up last week's risk-off gains as investors shifted out of haven assets and chased commodities and commodity currencies higher. The NOK, NZD and AUD all outperformed other major units, with the CAD being the only commodity-led currency to miss out, following campaign promises from Prime Minister Trudeau. Trudeau announced plans to raise taxes on banks and insurance companies while banning foreign home buyers for two years. The planned blackout for foreign investment in domestic real estate prompted the correction and forced the CAD back toward 0.79 US cents. The euro and GBP offer little to excite investors making small gains on the day. With little of note on today’s agenda, our attentions turn to Friday’s Symposium on Monetary Policy in Jackson Hole. While we anticipate the Federal Reserve President Jerome Powell will maintain the status quo and offer little new insight in a planned tapering of bond purchases, any insight or forward guidance has the potential to disrupt price action into the weekly close.

Expected Ranges

  • AUD/USD: 0.7180 - 0.7320 ▲
  • AUD/EUR: 0.6120 - 0.6220 ▲
  • GBP/AUD: 1.8820 - 1.9050 ▼
  • AUD/NZD: 1.0380 - 1.0520 ▼
  • AUD/CAD: 0.9090 - 0.9220 ▲