Home Daily Commentaries Australian dollar falls to one month low

Australian dollar falls to one month low

Monday 22 August, 2022

Daily Currency Update

The Australian dollar dipped to a one-month low on Friday and below US$0.69 following a surge back into the US dollar on recession fears globally. Opening at US$0.6913, the local currency continued its path lower following a poor jobs report on Thursday, seeing 40,900 jobs lost in July as risk sentiment declined. Oil prices fell 1.5% for the week, and the Dow Jones Industrial was 0.86% lower on the day. The Nasdaq was also down 2% as 10 US treasury yields pushed 9 basis points higher to 2.974%. Intraday lows were seen at US$0.6865 before the AUD/USD finished 0.57% lower to US$0.6874. The Australian dollar opened this morning at US$0.6871. We expect support levels to hold onto moves approaching US$0.6830 while any upward push will likely meet resistance at US$0.69.

Key Movers

On Friday, the US dollar was a key mover as recession fears saw a sell-off on equities as treasury yields moved higher. The Nasdaq was the biggest casualty for the day as tech stocks moved lower on fears the Federal Reserve Bank needs to be even more aggressive with its interest rate hikes. With another month to go until the Federal Open Market Committee’s (FOMC) next interest rate meeting, investors have started to get jittery about rising inflation which is at decade highs in the United States. Citi has forecast UK inflation to peak at 15% in Q1 2023 despite hitting a forty-year high last week of 10.1%. The US Dollar Index (DXY), which measures a basket of currencies against the world's most traded currency, rose 0.57% on the day to finish at US$1.0810. Elsewhere Japanese inflation hit an 8-year high to reach 2.4% but is unlikely to change the Bank of Japan’s ultra-loose monetary policy despite being above its inflation target of 2%. Notwithstanding the higher rate, the US dollar was higher on the day and finished at ¥136.86. The British pound also finished lower at £1.1824 despite retail sales rising 0.3% for July. Monday looks to be a quiet day as the market positions itself this week ahead of the Jackson Hole Symposium due to start on Thursday evening.

Expected Ranges

  • AUD/USD: 0.6830 - 0.6900 ▼
  • AUD/EUR: 0.6820 - 0.6880 ▼
  • GBP/AUD: 1.7000 - 1.7400 ▼
  • AUD/NZD: 1.1080 - 1.1160 ▲
  • AUD/CAD: 0.8900 - 0.8980 ▼