Home Daily Commentaries AUD punches back above US$0.67 as US labour market teeters

AUD punches back above US$0.67 as US labour market teeters

Daily Currency Update

The Australian dollar tracked upward through trade on Thursday, punching through US$0.67 on the heels of a broadly weaker USD and improved risk backdrop. A sharp uptick in US jobless claims compounded calls for the Fed to consider pausing its tightening cycle, forcing 2- and 10-year US treasury yields lower. Having found support at US$0.6650 through the domestic session the AUD climbed steadily overnight as bonds, equities and risk assets all rallied. Having surged through US$0.67 around midnight AEST the AUD then traded flat through the rest of the session bouncing between US$0.6710 and US$0.6720. With most major counterparts enjoying strong gains against the USD the AUD is flat when valued against key crosses yet has held onto gains above 0.62 against the euro and 1.10 against the NZD.

Our attentions turn now to China inflation data. With the yuan under increasing pressure a miss could spill over into the AUD, stifling momentum into the weekly close. Due to the public holiday on Monday there will be no daily commentary. We will be back on Tuesday 13 June.

Key Movers

The US dollar underperformed through trade on Thursday with dollar indices giving up near 0.7% on the day. US jobless claims jumped last week to their highest level since October 2021 and point to a broader softening in the labour market. The uptick in claims for unemployment benefits comes on the heels of last week’s non-Farm payroll print, wherein the unemployment rate jumped a hefty three tenths of a percent and wage inflation slowed. With leading indicators pointing to a rapid rise in unemployment claims and sharp correction in wage growth, there is growing support for the Fed to end its current tightening cycle. A pause in the cycle next week is likely now, yet the market still has priced a further 20-point tightening between June and July, suggesting a rate hike in July is to be expected. With the USD under pressure the euro extended back through 1.07 and 1.0750 marking intraday highs just short of 1.0790, while sterling punched back above 1.25 to touch 1.2560, and the hapless yen forced a break back below 140 and 139 against a broader downturn in the global rates backdrop.

Our attentions turn now to China inflation data and a Canadian employment report as markers for direction into the weekly close and next weeks all important fed update.

Expected Ranges

  • AUD/USD: 0.6620 - 0.6750 ▲
  • AUD/EUR: 0.6180 - 0.6250 ▲
  • GBP/AUD: 1.8580 - 1.8820 ▼
  • AUD/NZD: 1.0980 - 1.1050 ▼
  • AUD/CAD: 0.8880 - 0.9020 ▲