AUD steadies ahead of key US labour market data
Thursday 9 March, 2023
Daily Currency UpdateThe Australian dollar stabilised through trade on Wednesday as markets calmed following Tuesday’s aggressive repositioning, in the wake of Fed Chair Jerome Powell’s testimony on Monetary Policy. Having touched fresh year-to-date lows of US$0.6570, the AUD set about clawing back losses. There was little reaction to Reserve Bank of Australia (RBA) Governor Phillip Lowe who followed Tuesday’s dovish guidance with a speech that provide more detail and insight into RBA thinking. Lowe highlighted the conflicting nature of key macroeconomic data sets and the importance of being flexible when considering future rate hikes. The AUD climbed steadily through the latter part of the domestic session and through the early hours of overnight trade before momentum stalled and selling pressures forced the embattled currency back below US$.66. Second-tier US labour market data wrote in above expectations elevating expectations for another strong Non-farm payroll print on Friday. As calls grow for the Fed to raise rates by 50 basis points later this month labour force data Friday and CPI inflation data due next week will prove critical in shaping near-term AUD direction.
Key MoversThe Canadian dollar was the worst major performer Wednesday, giving up more ground to the USD after the Bank of Canada elected to pause its tightening cycle and maintain a 4.5% cash rate. The BoC is the first major central bank to push back additional rate hikes, preferring to allow the string of past rate adjustments to filter through to the real economy. With macro data suggesting inflation will correct back toward 3% by the middle of the year, the policymakers are content in assessing conditions in a bid to cushion any potential economic downturn. With the CAD under pressure, the USD pushed toward 1.38, its highest level since October last year. Outside the CAD price action across major currencies has been relatively modest as investors take stock and consolidate following Tuesday’s elevated volatility. With little new guidance offered by Jerome Powell as he fronted the Senate Panel on Monetary policy for a second day, markets seemed content in squaring positions and preparing for Friday’s all important Non -Farm Payroll print. With second-tier labour market data printing above expectations, another robust labour market update ahead of key inflation data due next week could see the USD extend gains and compound losses across key majors, namely the Euro and GBP.
- AUD/USD: 0.6550 - 0.6650 ▼
- AUD/EUR: 0.6220 - 0.6320 ▼
- GBP/AUD: 1.7820 - 1.8080 ▼
- AUD/NZD: 1.0750 - 1.0850 ▲
- AUD/CAD: 0.8980 - 0.9150 ▲