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AUD bounces back toward 0.74 as global rates drive USD lower

Friday 10 September, 2021

Daily Currency Update

The Australian dollar edged back toward 0.74 US cents overnight amid a broad weakening across the USD and euro, yet still lagged the JPY and CHF as markets chose to maintain a largely cautious tone. Having tested a break below 0.7350, the AUD found support through the overnight session, buoyed by a softening across US 10-year bond yields and an uptick across key commodity prices. Copper advanced 1.5%, while Aluminum marked a new 13 year high. The AUD touched intraday day highs at 0.7395 before edging lower into this morning’s open and what looks to be a relatively quiet session. Having failed to take advantage of euro softness following the ECB policy meeting, the Aussie struggled against most crosses. Closing flat against the shared currency while giving up ground against the NZD, GBP and CAD. With little of note on the days macroeconomic ticket our attentions remain with broader global forces and the underlying risk narrative for direction into the weekend.

Key Movers

Amid a drop across global rates, the USD and euro lagged most major counterparts through trade on Thursday, while the JPY and CHF led gains as investors saw little reason to shift away from the weeks risk off vibe. The ECB offered little to spark a risk recovery driving the euro toward 1.18, before broader USD weakness helped it close nearer 1.1825. The ECB, as expected, opted to reduce the pace of their Pandemic Bond Buying Program, yet failed to confirm the scale of the reduction and were at pains to point out it is not an intention to shift purchases back to zero, but rather a “recalibration” ahead of a review in December. While offering an optimistic assessment of the economic recovery to date, the ECB continues to lag major central bank counterparts in a path to normalisation. With the current emergency bond purchase program expected to run into March and the ECB’s traditional QE Asset purchase program likely bolstered in Q2 2022 to smooth the market transition, the ECB is a long way from shifting interest rates back above zero and toward normal. With little of note on today’s macroeconomic ticket we expect a relatively quiet close to the week.

Expected Ranges

  • AUD/USD: 0.7330 - 0.7450 ▼
  • AUD/EUR: 0.6190 - 0.6260 ▼
  • GBP/AUD: 1.8580 - 1.8920 ▲
  • AUD/NZD: 1.0320 - 1.0420 ▼
  • AUD/CAD: 0.9290 - 0.9380 ▼