AUD range bound as markets await trade headlines and US payroll data
Written by
Daily Currency Update
The Australian dollar held a narrow range Wednesday, tracking between US$0.65550 and US$0.6590 amid a lack of headline news flow. Local retail sales data fell short of market expectations. There was some hope for a rebound in consumer activity through May, but it appears clear consumption remains subdued as sustained cost of living pressures and rising household debt weigh on growth. The softer print elevated calls for the RBA to lower rates again as consumer activity metrics continue to undershoot even downgraded forecasts. Having touched intraday lows at US$0.6546 the AUD found support overnight. Equities and risk assets rallied after a softer ADP payroll print lifted expectations for a Federal Reserve (Fed) rate cut, and President Trump announced a trade agreement had been reached with Vietnam. Having climbed back to US$0.6588, the AUD now sits marginally lower. Buying US$0.6585 at time of writing.Our attentions now turn to US Non-farm payroll numbers (out a day early this month in observance of Independence Day on Friday). We are closely attending to the unemployment rate and payroll gains, while jobless claims will help round out the US labour market picture. Elsewhere, China Services PMI and the European Central Bank's June minutes round out the macro ticket.
Key Movers
The US dollar DXY index was little changed on Wednesday, as gains won against the pound and euro were offset by losses marked against the yen. The pound was a standout underperformer, down nearly 1% after UK gilt yields plunged amid rising fiscal concerns. Friction within the UK government's ranks and fear for the current fiscal backdrop elevated calls for the Chancellor of the Exchequer to step down. The move is a reminder that budget concerns and fiscal challenges are not solely isolated to the US. Having slipped below 1.37 and 1.36, Sterling tumbled toward an intraday low of 1.3567 before finding support, edging back toward 1.3650 ahead of this morning’s open.Our attention today remains with UK fiscal concerns, US trace headlines and Non-farm payroll data. After a softer ADP payroll print last night, we're keenly attuned to payroll gains through June and the updated unemployment rate as key markers governing potential Fed policy direction.
Expected Ranges
- AUD/USD: 0.6550 - 0.6600 ▲
- AUD/EUR: 0.5520 - 0.5620 ▲
- GBP/AUD: 2.0500 - 2.0900 ▼
- AUD/NZD: 1.0750 - 1.0850 ▲
- AUD/CAD: 0.8880 - 0.9020 ▼