While flat against the USD the AUD gave up ground to key counterparts in May

Daily Currency Update

AUD - Australian DollarPrice action across major currencies was largely muted through trade on Monday with volume thin and liquidity low as the United States and UK both enjoyed an extended weekend. Having tested lows at 0.77 US cents the Australian dollar crept higher on the day, advancing three tenths of a percent to touch intraday highs at 0.7740. Outside general USD weakness there was little of note driving the AUD uptick and while we remain firmly ensconced within a narrow trading handle an extended rally appears unlikely in the near term. Given most analysts have priced in sentiment driven upside the recent uncertainty around the pace of vaccination roll outs, ongoing pandemic supply constraints and rising geopolitical tensions are weighing on the AUD preventing any extension beyond 0.78 US cents. While we maintain our medium-term bullish outlook against the USD the Australian Dollar has come under pressure when valued against key counterparts, giving up ground to the NZD, GBP, EURO and CAD through May.Attentions turn to today’s RBA policy meeting. We expect they will affirm their commitment to accommodative monetary policy. Key will be the accompanying rate statement and any guidance the RBA is ready to bring forward the timeline of scaling back bond purchases. We don’t anticipate the RBA will move away from the current program of QE and as such the impact on currency markets could well be muted.