Home Daily Commentaries Aussie dollar falls below 68 US cents

Aussie dollar falls below 68 US cents

Daily Currency Update

The Australian dollar is slightly weaker this morning when valued against the Greenback.  In the absence of high-impact data releases, markets started the new week on a cautious note allowing the Greenback to find demand. The Australian dollar snapped three days of gains and dropped 0.84%, following last Friday’s US producer’s inflation data, ahead of the release of the Consumer Price Index (CPI) in the United States (US). An upbeat sentiment that usually bolsters the Greenback keeps the Aussie dollar pressured. The AUDUSD pair is currently trading at 0.6748.

Looking ahead today and we will see the release of both the Westpac Consumer Sentiment and NAB Business Confidence. Looking ahead tomorrow, the Reserve Bank of Australia (RBA) Governor Philip Lowe is due to speak about at the AusPayNet Annual Summit, in Sydney.

On Thursday all eyes will be on the Unemployment Rate released by the Australian Bureau of Statistics.  The Jobless rate is expected to remain steady at 3.4%. Finally, on Friday we will see the release of the monthly Flash Manufacturing PMI.

Key Movers

All eyes will be on the US CPI data which will be released tonight, with the market looking for another 0.3% month-on-month reading for core inflation. Last month’s downside surprise to core inflation sparked a wave of optimism that US inflation might have peaked, leading to a pullback in Fed rate expectations and contributing to the surge in risk assets.

US equities and other risk-sensitive assets have been in a holding pattern over the past few trading days, poised for a directional breakout should US CPI deviate from the consensus of an annualised core inflation rate of 6.4%, headline at 7.7%.

The British Pound is firm on Monday within a bullish cycle that targets the 1.2400 area in what would be a measured move to the upside from the recent lows near 1.2100. GBPUSD will be in the limelight this week due to the Monetary Policy Committee (MPC) and Federal Open Market Committee (FOMC) meetings this week. We expect the Bank of England (BoE) to hike the Bank Rate by 50bp on December 16, bringing the official cash rate to 3.50%.

In other news, UK Gross Domestic Product grew by 0.5% after September's 0.6% contraction, but fears of a lengthy UK recession are still weighing on sentiment.

Expected Ranges

  • AUD/USD: 0.6650 - 0.6850 ▼
  • AUD/EUR: 0.6300 - 0.6500 ▼
  • GBP/AUD: 1.8050 - 1.8250 ▲
  • AUD/NZD: 1.0450 - 1.0650 ▲
  • AUD/CAD: 0.9100 - 0.9300 ▼