Home Daily Commentaries Australian Dollar opens at 4-week highs against the U.S Dollar

Australian Dollar opens at 4-week highs against the U.S Dollar

Daily Currency Update

The Australian Dollar has closed last week higher breaking out of the 67c – 68c range vs the Greenback, in the last few hours of the trading week the AUD/USD launched higher to clear the trendline resistance level and close on Friday at 0.6856. The main driving force behind the rally was Greenback weakness against most major currencies as hopes a Brexit deal will help mitigate risks of a recession within the EU trading bloc.
Locally, we saw the RBA Governor Lowe speak at the International Monetary Fund in Washington where he commented that it was "extraordinarily unlikely” that the economy will need to be stimulated by cutting interest rates into negative territory. He also added, there is a high risk that the main effect of lower interest rates will be to push up prices of existing assets rather than stimulate investment in new assets. These comments had little impact on the Aussie but did however spark tweets by some economists on the RBA’s policy saying that low interest rates are ineffective for growing true GDP growth.
The economic calendar is very light today but Brexit headlines should keep everybody busy. From a technical perspective, the AUD/USD pair is currently trading at 0.6845 and we continue to see immediate support at 0.6800, a sustained move under this could lead to 0.6760. On the flip side, resistance is seen at 0.6890 followed by 0.7000.

Key Movers

It was a quiet on the macro front with no releases in the U.S scheduled, the U.S Dollar took direction mostly from offshore events which saw weakness on the DXY and close at 97.14, a level not witnessed since early August. Traders remained cautious after Chinese GDP data showed the negative impact the US-China trade war has had on China. We were predicting a slowdown of GDP in Q3 from 6.2 percent to 6.1 percent year-on-year with the actual number contracting further to 6.0 percent as additional tariffs put a leash on growth. The US–China trade war is clearly hampering the economy with exports contracting 0.4% as the U.S. began imposing an additional 15% tariff on $110 billion worth of consumer goods from Sept 1st. Imports declined 6.5% for the quarter. EUR/USD rallied to a near two-month high of 1.1169 while the USD/JPY cross-rate dropped to 108.38.
Meanwhile, in the UK, most of the Britain waited for more updates on Brexit. British MP’s voted over the weekend to postpone a decision on whether to back Prime Minister Boris Johnson’s Brexit deal with the EU. Some lawmakers fear, if the deal passes the legislation to implement it might not be ready by October 31, the date the U.K. would be scheduled to leave the EU. They say there is a possibility the U.K. could be forced to exit the European Union "on no-deal terms." The GBP/USD cross-rate closed the week at 5-month highs at 1.2973.
The UK parliament is voting today on the new Withdrawal Agreement as agreed between the UK government and the European Union.

Expected Ranges

  • AUD/USD: 0.6780 - 0.6900 ▼
  • GBP/AUD: 1.8670 - 1.9200 ▲
  • AUD/NZD: 1.0680 - 1.0790 ▼
  • AUD/EUR: 0.6090 - 0.6180 ▲
  • AUD/CAD: 0.8920 - 0.9040 ▲