Daily Currency Update
The Australian dollar edged back above 0.6850 through trade on Monday yet remains pinned below 0.69 US cents amid sustained uncertainty surrounding the global growth outlook. The AUD edged lower on open testing 0.68 US cents and traded sideways through much of the early part of the domestic session. Commodity currencies then found support and the AUD tracked toward intraday highs at 0.6890. With the US markets closed in observance of Independence Day and 4th of July celebrations liquidity was thin through the overnight session. Reports President Biden will announce a roll back on some Chinese tariffs, particularly those impacting key consumer goods helped prop up commodity currencies and added support for the AUD on moves back toward 0.6850. The global growth outlook remains fragile and the AUD vulnerable to ongoing corrections in the risk narrative. Having tested 0.68 US cents we are eyeing a break below this handle and technical supports as a marker of another possible bearish move. Our attentions today turn to the RBA policy meeting and rate update. We anticipate policy makers will push through a 50-basis point adjustment, lifting the cash rate to 1.35%.
Key Movers
With US markets closed for 4th of July celebrations price action across major currencies was largely muted. Commodity currencies outperformed with the Canadian Dollar and Norwegian Kroner heading the leaderboard. The Euro struggled to find any real direction tracking between 1.0420 and 1.0460 despite a notable lift in European bond yields. Ongoing hawkish commentary for ECB policy makers has helped undo last weeks massive fall as markets price in an aggressive shift in Monetary policy. Having staved off moves approaching parity the Euro should remain well supported on move approaching this handle as Fed and ECB guidance move closer. The GBP opens largely unchanged as well, unable to maintain a break back above 1.2150, while the Yen was the worst performer on the day giving up 0.4% and allowing the USD to mark intraday highs at 135.70. With little of note on today’s ticket we expect ranges will remain largely unchanged, although returning US investors could prompt some volatility as they square positions after the long weekend. Our focus remains on Thursday’s FOMC meeting minutes and Friday’s Non-Farm Payroll update.
Expected Ranges
- AUD/USD: 0.6780 - 0.6950 ▲
- AUD/EUR: 0.6520 - 0.6620 ▲
- GBP/AUD: 1.7480 - 1.7820 ▼
- AUD/NZD: 1.0950 - 1.1120 ▲
- AUD/CAD: 0.8750 - 0.8890 ▲