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AUD steady in face of sustained US dollar upside

Wednesday 24 November, 2021

Daily Currency Update

AUD - Australian Dollar

The Australian dollar maintained a narrow trading handle throughout Tuesday, bouncing between 0.7205 and 0.7235. Price action across currency markets offered little to excite investors, as most preferred to consolidate Monday’s rates led move and square positions ahead of key US GDP and inflation data and the Thanksgiving Weekend. Having given up the October high above 0.75, the AUD appears well-supported on moves approaching 0.72/0.7170 with further support in play at year to date lows around 0.7130. Our attentions remain affixed to further moves across the global rates markets, while the broader risk narrative remains key in driving medium term direction. Momentum has shifted and sits behind the USD, with indices now marking fresh 12-month highs. We anticipate the AUD will maintain is current H2 pattern, bouncing between 0.70 and 0.75 US cents.

Key Movers

Price action across currency markets were largely well contained through trade on Tuesday, with only modest changes in broader positions through the past 12-24 hours. The USD continues to test new highs when measured against a basket of major counterparts, extending beyond 115 against the Japanese yen, marking highs not seen since 2017 while forcing the GBP below 1.34 and 1.3350 toward intraday lows at 1.3345. The euro found some support, moving against the grain and pushing back above 1.1250 on the heels of better than expected PMI data and hawkish commentary from ECB policy member Schnabel. European PMI’s for October, suggest the economy is withstanding the pressures created by supply constraints and higher energy prices, while Member Schnabel noted inflation risks remain skewed to the upside. This hawkish remark has been pounced on as a potential marker and shift in ECB policy, and could preclude a move in monetary policy sooner than currently anticipated. Having touched intraday highs at 1.1275 the euro edged lower into the daily close and currently sits marginally below 1.1250. With new lockdown measures likely to crimp Q4 and Q1 2022 growth expectations, risks remain broadly skewed to the downside for now.

Expected Ranges

  • AUD/USD: 0.7170 - 0.7320 ▼
  • AUD/EUR: 0.6380 - 0.6450 ▼
  • GBP/AUD: 1.8380 - 1.8590 ▼
  • AUD/NZD: 1.0320 - 1.0520 ▲
  • AUD/CAD: 0.9090 - 0.9210 ▼