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Australian dollar capped at 74 US cents

Monday 13 September, 2021

Daily Currency Update

The Australian dollar finished the week a full cent lower and back below 74 US cents as investors digested the RBA’s dovish decision on Tuesday to continue its bond purchasing plan till February 2022 with a review in November. Opening at 0.7364 on Friday, the Australian dollar closed 0.2% lower as intraday highs were seen at 0.7409 following a modest recovery of 0.5% on the S&P/ASX 200 index. The eventual decline for the local currency occurred in offshore markets into the weekly close as Iron Ore sunk to one-year lows. Covid recovery concerns continue to spook markets and the risk that the global economy stalls amid the latest Delta variant outbreak. A stronger than expected PPI number in the United States stabilised the greenback as the AUD/USD closed at 0.7349. The AUD/USD cross will take its cues this week from the local labour report due for release on Thursday. The Australian dollar opens this morning at 0.7350. We expect support levels to hold onto moves approaching 0.7315, while any upward push will likely meet resistance at the 74 US cent handle.

Key Movers

U.S. producer prices rose 0.7% in August and its biggest annual gain in nearly 11 years. High inflation is expected to remain a concern as supply chains continue to be tested during the pandemic. Transportation and warehouse prices led the numbers increasing 2.8% along with food prices at 2.9%. The US Dollar Index (DXY) which measures a basket of currencies against the worlds most traded currency was steady, rising a modest 0.13% on the day to 92.64. Elsewhere the Canadian economy showed signs of improvement as the latest labour release showed an increase in jobs of 90,000 added in August and the unemployment rate declined to 7.1% for the year. GBP/USD pulled back 0.07% from monthly highs as construction output and GDP figures for the month both came in weaker. The EUR/USD finished the day 0.13% lower as several Eurogroup meetings took place on Friday evening. This week markets will be centrally focused on inflation prints as several G-10 countries release their figures for the month. Retail sales and the latest Philly Fed Manufacturing Index in the United States are also due for release on Thursday evening.

Expected Ranges

  • AUD/USD: 0.7315 - 0.7400 ▼
  • AUD/EUR: 1.0300 - 1.0400 ▼
  • GBP/AUD: 1.8550 - 1.8900 ▲
  • AUD/NZD: 0.6200 - 0.6260 ▼
  • AUD/CAD: 0.9300 - 0.9370 ▼