Home Daily Commentaries Price action tempered as markets pause to take stock

Price action tempered as markets pause to take stock

Daily Currency Update

Price action through Wednesday calmed as markets adopted a more cautious approach, consolidating recent moves and avoiding any major value swings. Having eyed a break toward US$0.68 the AUD tracked lower through the overnight session marking intraday lows at US$0.6720 before finding support and creeping back toward US$0.6740. Markets largely ignored an upswing in domestic wages instead directing their focus to offshore stimuli. A stronger than anticipated US retail sales print and ongoing hawkish Fed commentary, coupled with concerns geopolitical tension may escalate after a Russian made missile missed its mark and landed in Poland, have prompted investors to pause and take stock of the risk on gains enjoyed through the last week. A tempering in risk appetite has seen the AUD underperform. Having found support on moves approaching $US0.6720 our attentions turn now to domestic unemployment data, US housing data, jobless claims and Fed commentary.

Key Movers

In light of the recent surge in volatility price action across major currencies was relatively muted through trade on Wednesday as investors chose to take stock of recent moves, consolidating gains amid a modest souring in risk appetite. Equity markets shifted lower and the USD appeared to consolidate its recent sharp decline with the DXY index little changed through the last 24 hours. The Euro extended its break above parity testing a move above €1.04. The GBP extended its recent advance pushing back above £1.19 after a stronger than expected CPI print. UK price pressures remain elevated with headline CPI printing much higher than anticipated. Annual inflation accelerated to 11.1% its highest level in more than 4 decades. While an increase in gas and electricity prices is largely to blame, underlying inflation remains concerningly elevated with core inflation running up to 6.5% y/y. The surprise uptick has prompted investors to price in another 75 point Bank of England rate hike next month, despite warning from BoE Governor Bailey the market was overpricing the monetary policy tightening schedule.

Our attentions turn now to US housing data and jobless claims while commentary from key Fed officials and the UK chancellors Autumn Statement set to add some colour and direction.

Expected Ranges

  • AUD/USD: 0.6680 - 0.6820 ▼
  • AUD/EUR: 0.6420 - 0.6520 ▼
  • GBP/AUD: 1.7480 - 1.7820 ▲
  • AUD/NZD: 1.0920 - 1.1020 ▼
  • AUD/CAD: 0.8930 - 0.9020 ▼