Home Daily Commentaries Australian dollar trades below US$0.67

Australian dollar trades below US$0.67

Wednesday 21 December, 2022

Daily Currency Update

The Australian dollar is weaker this morning when valued against the US dollar. The AUD/USD pair fell to an overnight low of US$0.6629. The Australian dollar started losing ground after the Reserve Bank of Australia minutes showed that policymakers considered leaving interest rates unchanged at the December meeting. The Reserve Bank is openly considering a halt to its sharp increase in official interest rates as previous hikes start to bite the spending power of consumers and signs emerge that inflation pressures may soon abate. Minutes released yesterday from the December 6 meeting, at which the bank lifted the official cash rate by a quarter percentage point, show board members considered holding the cash rate at 2.85 per cent in the run-up to Christmas. The bank has lifted interest rates at every one of its monthly meetings since May in its most aggressive tightening of monetary policy in more than 30 years. The Reserve Bank of Australia board will not meet again until early February. Financial markets put the chance of a further interest rate rise at 50-50. Looking ahead today, the Melbourne Institute will release the monthly Leading Index, designed to predict the economy's direction. On Friday, the Australia Treasury Department will release the Mid-Year Economic and Fiscal Outlook, which compares the government's fiscal performance to the strategy outlined in the prior Annual Budget.

Key Movers

The Japanese yen surged to a four-month high against the US dollar on Tuesday after the Bank of Japan stunned markets with a surprising tweak to its bond yield control program. While it kept broad policy settings unchanged, pinning short-term JGB yields at -0.1% and the 10-year yield around zero, the Bank of Japan decided to let long-term yields move 50 basis points on either side of its 0% target, wider than the 25 basis point band previously. The move rattled investors already worried about the economic fallout of rising interest rates and untameable inflation around the globe. The dollar was down 3.6% against the Japanese currency at ¥131.95. It hit a low of ¥131.83, a level last seen in mid-August. The timing of the move surprised since most Bank of Japan watchers had expected no changes until the current governor Haruhiko Kuroda's 10-year term ends at the end of March. In other news, the EUR/USD pair was unable to advance beyond US$1.0650 and finished another day with little changed, just above the US$1.0600 level. While the GBP/USD pair seesawed between gains and losses but finished the day flat at US$1.2150. The USD/CAD pair finished the day in the red at around CA$1.3610, with the CAD underpinned by higher oil prices. WTI settled at $76.25 a barrel. Canada will publish November inflation figures on Wednesday.

Expected Ranges

  • AUD/USD: 0.6550 - 0.6750 ▼
  • AUD/EUR: 0.6150 - 0.6350 ▼
  • GBP/AUD: 1.8100 - 1.8300 ▲
  • AUD/NZD: 1.0400 - 1.0600 ▲
  • AUD/CAD: 0.8950 - 0.9150 ▲