Home Daily Commentaries AUD trades sideways as attentions turn to US inflation and central bank

AUD trades sideways as attentions turn to US inflation and central bank

Daily Currency Update

The Australian dollar enjoyed mixed fortunes through trade on Tuesday to trade flat for the day as markets look to square positions ahead of two critical US macroeconomic events. Having slid back below US$0.66 following Friday’s robust US non-farm payroll print the AUD remained on the back foot amid a risk-off mood after the People's Bank of China set a lower CNY fixing allowing the USD to push above ¥7.25, dragging the AUD lower as a proxy. With equities and risk assets on the back foot amid higher rate expectations and geo-political uncertainty, the AUD slumped to intraday lows at US$0.6588. With the AUD seemingly headed for a daily depreciation the USD then gave up gains and the Aussie clawed its way back above US$0.66.
Our attention now turns to US CPI data and the FOMC policy update for direction.

Key Movers

The euro continues to underperform, giving up more ground through trade on Tuesday amid ongoing political uncertainty. The single currency slid below US$1.0750, giving up 0.2% on the day and trading as low as US$1.0720. French equities continued their slide and a distinct risk-off mood enveloped markets as traders questioned whether Macron could hold onto the Presidency if his support is eroded at the June 30 election. Having traded near US$1.09 leading into last week's US non-farm payroll print the euro has suffered a swift and precipitous correction and we expect volatility will continue through this month and leading into the election.
The pound is also on the back foot, following softer than expected labour market data. While wage data showed a jump in the quarterly numbers an increase in the unemployment rate and jobless claims drove calls for the Bank of England to move and cut rates sooner. Market odds are now pricing a near 45% chance of a rate cut by August, up from 36% before the print.
With the USD enjoying early risk-off gains before trading flat for the day our attention turns to tonight’s all-important US CPI inflation print and FOMC policy update. We anticipate inflation should continue to fall as oil and energy prices ease and a print near 3.5% should afford markets some comfort that disinflationary forces are still in play. We expect the Fed will leave rates on hold and our attention will turn to the Fed’s updated dot plot and accompanying rate statement for guidance and direction.

Expected Ranges

  • AUD/USD: 0.6500 - 0.6700 ▼
  • AUD/EUR: 0.6080 - 0.6200 ▲
  • GBP/AUD: 1.9200 - 1.9400 ▲
  • AUD/NZD: 1.0700 - 1.0800 ▼
  • AUD/CAD: 0.9050 - 0.9130 ▼

Written by

Matt Richardson


As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.