Home Daily Commentaries Aussie dollar trades above 68 US cents

Aussie dollar trades above 68 US cents

Wednesday 14 December, 2022

Daily Currency Update

The Australian dollar is stronger this morning when valued against the Greenback supported on the back of the US Consumer Price Index coming which came in softer than expected, fuelling the prospects of a pivot at the Federal Reserve. The Aussie dollar has subsequently got a boost from a weaker Greenback that is tumbling on Wall Street as US equities soar. AUD/USD is now 1.7% higher overnight, breaking prior bull cycle highs near US$0.6844 and has printed a fresh high of US$0.6877. The Aussie dollar however found some resistance just over US$0.6890. Should US$0.6850 hold up on a retest of bullish commitments then there will be prospects of a run towards US$0.7000. Looking ahead today on the local data front and the Reserve Bank of Australia (RBA) Governor Philip Lowe is due to speak about at the AusPayNet Annual Summit, in Sydney. On Thursday all eyes will be on the Unemployment Rate released by the Australian Bureau of Statistics.  The Jobless rate is expected to remain steady at 3.4%. Finally on Friday we will see the release of monthly Flash Manufacturing PMI.

Key Movers

Overnight inflation data from the United States released showed an increase in the Consumer Price Index (CPI) in November of 0.1% below the 0.3% of market consensus. According to analysts another moderation in monthly core CPI helps to reaffirm that the USD peak is here. The data comes ahead of the FOMC’s latest forecasts and policy announcement in just over 24 hours. As a consequence of the Consumer Price Index, the terminal Fed rate is now down to 4.86% vs 4.98% prior to the report which is weighing heavily on the US dollar and US Treasury yields. While the market has also pared back further tightening expectations, with a dialled-down 25bps hike in early February now seen as more likely than another 50bps. The Great British pound also soared sharply following the release of a softer-than-expected inflation report in the United States (US) reported by the Bureau of Labor Statistics (BLS) on Tuesday. In the release, the GBP/USD broke to levels last seen in June 2022, hitting a fresh six-month high at around 1.2442, though it remains volatile in the aftermath of the release of the Consumer Price Index (CPI). In other news UK public sector wages increased by 2.7% in the year to October, according to official figures that will fuel the anger of rail and health sector workers preparing to go on strike in the run-up to Christmas. The headline rate of pay rises for all workers excluding bonuses rose to 6.1% in the three months to October, from 5.7% in September. Ministers have said they will fund a pay rise of 3% for public sector workers and give nurses an average of 4% in line with a pay review body’s recommendations.

Expected Ranges

  • AUD/USD: 0.6750 - 0.6950 ▲
  • AUD/EUR: 0.6350 - 0.6550 ▲
  • GBP/AUD: 1.7950 - 1.8150 ▲
  • AUD/NZD: 1.0500 - 1.0700 ▲
  • AUD/CAD: 0.9150 - 0.9350 ▲