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Aussie buoyed by moderation in US inflation pressures

Thursday 12 August, 2021

Daily Currency Update

AUD - Australian DollarThe Australian dollar tracked toward 0.74 US cents overnight following a moderation in the US Consumer Price Index for July. After a series of huge increases in April, May and June, prices eased across a number of key marketplaces suggesting recent inflationary pressure may indeed be transitory. The AUD jumped off intraday lows at 0.7330, surging to touch 0.7390 immediately following the data drop, before flattening into a narrow range between 0.7370 and 0.7390 into this morning’s open.With little of note on the domestic macroeconomic ticket today, our attentions remain with the global risk narrative. The push and pull of short-term pandemic-led headwinds and long run recovery expectations should ensure the AUD remains largely rangebound. Until the market finds a catalyst to drive a meaningful change in direction and another bout of volatility, we expect to bounce between 0.7290 and 0.7420.

Key Movers

The US Dollar Index fell through trade on Wednesday following a moderation in Consumer price pressures and a robust US treasury auction. The US Consumer Price Index fell in July and at first glance afforded some hope that current pressures are indeed transitory. While a one-month moderation is not enough to declare a trend, it provides welcome relief from the massive uptick seen through April, May and June. The dollar was forced lower immediately following the data release and met added downside as a strong US treasury auction pushed yields lower. The Dollar Index fell 0.2% on the day allowing the JPY, EUR, CAD and GBP all to enjoy overnight gains in region of 0.2-0.3%. Our attentions turn now to UK Q2 GDP data. With the economy starting to open up in the 3 months to June 30, we expect a robust print and significant uptick in quarter on quarter growth. A print above 5% could help spur sterling back above 1.39.

Expected Ranges

  • AUD/USD: 0.7290 - 0.7420 ▲
  • AUD/EUR: 0.6220 - 0.6320 ▲
  • GBP/AUD: 1.8680 - 1.8920 ▼
  • AUD/NZD: 1.0430 - 1.0520 ▼
  • AUD/CAD: 0.9180 - 0.9270 ▲