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AUD fails again to extend beyond 0.75 as new range forms

Thursday 15 July, 2021

Daily Currency Update

AUD - Australian DollarThe Australian dollar drifted sideways through much of Wednesday struggling to break outside a 50-point band and extend beyond 0.75 US cents. With little of note on the domestic ticket, the AUD bounced between 0.7435 and 0.7465 before extending toward intraday highs at 0.7485 amid broader USD weakness overnight. Markets largely ignored news Sydney’s COVID-19 lockdown would be extended into the end of July with high case numbers over the last few days ensuring yesterday’s announcement was a mere formality. Perhaps of greater concern is Melbourne recording 7 new cases. With at least one of the positive cases infectious in the community, there are real fears the city will again be thrust into lockdown. If Australia’s two largest cities face an extended lockdown we may see markets adjust rates expectations which could further dampen demand for the AUD. Our attentions today turn to domestic unemployment and labour market data. After outperforming in May we expect a moderation in new job numbers and a steady unemployment rate. A strong read should help underpin support for the AUD; however, given the data won’t yet show the impacts of the current Sydney lockdown, investors may prefer to sideline bets until next month when a clearer picture is available.

Key Movers

The US dollar fell against most major counterparts through trade on Wednesday with the Bloomberg dollar index falling half a percent and giving up gains enjoyed in the aftermath of Tuesday’s CPI print. USD weakness allowed the euro to push back through 1.18 to touch intraday highs at 1.1840, while the pound tested 1.39 having touched highs at 1.3890. Markets largely ignored a surprise uptick in domestic inflation and comments from Bank of England member Ramsden. The suggestion the Bank of England could tighten policy sooner than originally forecast is not a surprise to markets with most analysts already front running a shift in monetary policy. The CAD failed to capitalise, softening following the Bank of Canada’s monetary policy statement. The BOC opted to leave rates on hold at 025% and taper bond purchases by 1 billion per week as expected; however, it failed to expand on forward guidance and presented a somewhat dovish overview of the recovery. The CAD fell half a percent overnight, a move compounded by a fall in oil prices.

Expected Ranges

  • AUD/USD: 0.7420 - 0.7550 ▲
  • AUD/EUR: 0.6280 - 0.6350 ▼
  • GBP/AUD: 1.8450 - 1.8620 ▲
  • AUD/NZD: 1.0580 - 1.0720 ▼
  • AUD/CAD: 0.9290 - 0.9410 ▲