Aussie dollar trading below US$0.66
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Daily Currency Update
The Australian dollar is weaker this morning when valued against the Greenback currently trading at 0.6564 at time of writing. The AUD/USD pair declined on Friday, continuing its downtrend. The renewed strength of the US dollar weighs on the pair despite improved risk sentiment. However, the hawkish stance of the Reserve Bank of Australia (RBA) and expectations of additional Chinese stimulus could support the Aussie. Last week the Reserve Bank of Australia kept interest rates on hold at 4.35 per cent for its eighth-straight meeting, despite inflation falling to its lowest level in almost four years. Economists and analysts almost unanimously expected the central bank to leave the cash rate at its highest level since November 2011. While headline inflation fell to 2.8 per cent in the September quarter, the lowest level in three-and-a-half-years, the RBA said it remained too high to consider cutting rates. Looking ahead this week and on Tuesday we will see the release of the Westpac Consumer Sentiment and NAB Business Confidence. On Wednesday we will see the release of the Wage Price Index for the quarter. It's a leading indicator of consumer inflation - when businesses pay more for labor the higher costs are usually passed on to the consumer. Finally, on Thursday all eyes will be on the Unemployment Rate decision which is expected to remain steady at 4.1%.Key Movers
The US dollar Index (DXY), which measures the value of the US dollar against the other six major currencies, improves to near 104.50 with 2-year and 10-year yields on US Treasury bonds standing at 4.20% and 4.33%, respectively, at the time of writing. Profit taking from post-election rally pushed the price lower, but relatively hawkish Fed rate cut is expected to further underpin the US currency. Fed cut rates by 25 basis points as widely expected and Chair Powell signaled in his post-policy meeting speech that the central bank is starting to assess the new economic landscape after Donald Trump enters the White House. Federal Reserve Chair Jerome Powell highlighted that the US central bank will continue to monitor economic data to guide the "pace and destination" of future rate adjustments, noting that inflation is gradually easing toward the Fed’s 2% target. Investors are now focused on the upcoming preliminary US Michigan Consumer Sentiment report, due on Friday.The Dow Jones Industrial Average (DJIA) rose into fresh all-time highs on Friday, clipping into 44,000 as stocks lean firmly bullish to close out a record week. The Dow had its best week since October of 2023, rising nearly 5% and piercing record bids three days in a row. The University of Michigan (UoM) Consumer Sentiment Index rose to 73.0 in November, overshooting the expected print of 71.0 and climbing further above October’s 70.5 as polled consumers tilt cautiously optimistic regarding the overall state of the US economy. On the downside, 5-year Consumer Inflation Expectations also ticked higher once again, rising to 3.1% compared to the previous print of 3.0%.
Expected Ranges
- AUD/USD: 0.6450 - 0.6650 ▼
- AUD/EUR: 0.6000 - 0.6200 ▼
- GBP/AUD: 1.9400 - 1.9600 ▲
- AUD/NZD: 1.0850 - 1.1050 ▼
- AUD/CAD: 0.9000 - 0.9200 ▲