AUD tests break above US$0.65 as all eyes turn to US payroll data
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Daily Currency Update
The Australian dollar rallied through trade on Thursday, stretching its legs and testing a break above US$0.65. Having tracked sideways for much of the domestic session, the AUD climbed off intraday lows at US$0.6487 and through US$0.65, marking session highs just north of US$0.6535 through overnight trade as markets reacted to the ECB policy meeting, US jobless claims and fresh trade headlines. The ECB cut its policy rate by 25 basis points yet suggested they are nearing the end of this monetary policy cycle, a clear indication that future rate cuts may be few and far between. Many analysts are now pricing in a pause to rate cuts in July with others calling an end to this easing sequence. The hawkish cut when coupled with a larger than expected increase in US jobless claims sparked plenty of action across global rates, with US yields falling and EU rates rising, driving the US dollar lower. While closing higher on the day, the AUD was unable to hold onto gains into this morning’s open and now trades back nearer US$0.65. The AUD has made a number of attempts to break above this key psychological resistance level over the last six weeks, only to be rebuffed. Our focus now turns to US non-farm payroll numbers this evening. A softer print could be the catalyst the AUD needs to close a session above US$0.65 and mark an extended run higher.Key Movers
There was plenty to digest overnight with the USD marking fresh multi-year lows and the euro testing new highs. The ECB cut its policy rate by 25 basis points in a widely anticipated move, however it caught investors off guard in the moments following the meeting when ECB president Christine Lagarde said “I think we are getting to the end of a monetary cycle”. The comments were followed by a Bloomberg report that suggested ECB officials expect to pause the easing cycle next month. The suggestion that any further rate cuts will be few and far between prompted European rates to rally and helped drive the euro toward 1.15. Softer US jobless claims helped the single currency consolidate its position as US treasury yields fell and the US dollar DXY index touched its lowest level in more than two years, before reports of easing tensions between the US and China helped arrest the dollars decline. A 90-minute phone call between President Trump and Premier Xi appears to have renewed faith in the US/China détente and alleviated growing tensions. The USD found support through the back end of the session forcing the euro back below 1.1440. In other news, the GBP tested a break above 1.36, while the yen pushed the dollar below 142.50 before closing lower in the day.Our attentions turn now to US non-farm payrolls as a crucial marker guiding direction into the weekly close.
Expected Ranges
- AUD/USD: 0.6430 - 0.6550 ▲
- AUD/EUR: 0.5650 - 0.5720 ▲
- GBP/AUD: 2.0700 - 2.1000 ▼
- AUD/NZD: 1.0750 - 1.0850 ▲
- AUD/CAD: 0.8850 - 0.8950 ▲