AUD slips amid risk off shift
Written by
Daily Currency Update
The Australian dollar trended lower Thursday, extending Wednesday’s downturn amid a risk off shift. There appears to be no real catalyst for the uptick in risk aversion outside sustained and ongoing uncertainty surrounding trade and the global economic outlook. Markets largely ignored domestic employment data despite a surprise surge in employment growth. An uptick in the participation rate ensured the unemployment rate remained steady at 4.1% after 89,000 new jobs were added to the economy through April. With new employment opportunities outpacing population growth, the market pared back expectations for RBA rate cuts, unwinding bets for two full 25-point rate adjustments by September. Having touched intraday highs at US$0.6450, the AUD fell steadily overnight, eyeing a break below US$0.64, before settling near US$0.6410 leading into this morning's open.With little noteworthy data on the domestic docket, our attentions remain with the underlying risk narrative and geopolitical developments, while Japanese Q1 GDP data and US consumer sentiment figures headline the macroeconomic ticket.
Key Movers
Safe haven currencies carried the day on Thursday, with the CHF and JPY outperforming all other majors, while commodity sensitive currencies propped up to the bottom of the leaderboard. Softer than anticipated US retail sales and PPI data prompted a correction in US treasuries allowing the yen to force the USD back below 146, while CHF gains suggest a risk off mood enveloped investors. Perhaps a correction or moment of consolidation after the rally enjoyed in the wake of the US/China 90-day tariff moratorium. The USD DXY index gave up 0.8%, while the euro edged back above 1.12 and sterling jumped above 1.33. The pound outperformed most counterparts after Q1 GDP numbers surprised to the upside. Led by an upswing in business investment, the economy grew 0.7% in the three months to March, making the UK the fastest growing major economy through the start of 2025.Our attentions turn now to Japanese Q1 GDP data and US consumer sentiment as macroeconomic markers guiding direction into the weekly close.
Expected Ranges
- AUD/USD: 0.6380 - 0.6520 ▼
- AUD/EUR: 0.5680 - 0.5780 ▼
- GBP/AUD: 2.0500 - 2.0900 ▲
- AUD/NZD: 1.0850 - 1.0950 ▼
- AUD/CAD: 0.8900 - 0.9000 ▼