AUD trips on heels of weaker China activity data
Wednesday 17 May, 2023
Daily Currency UpdateDespite a slew of macroeconomic data releases price action across major currencies was well contained Tuesday with the AUD edging off highs above US$0.67 to settle into the close just north of US$0.6650. Weaker Chinese activity data surprised markets adding to fears the post-Covid rebound is running out of puff. Retail sales, industrial production and investment all missed to the downside weighing on the Yuan and spilling over to dampen AUD demand. Having touched intraday highs day US$0.6710 the AUD tracked lower through the domestic session and extended losses through the overnight session. A broadly stronger USD forced the AUD to intraday lows of US$0.6653.
Our attentions turn now to Q1 wage data. With the labour market still running near full capacity stronger than anticipated wages data would afford the RBA the scope to continue hiking rates. With the RBA running behind its major counterparts the promise of another rate hike will do little to push the AUD above resistance, but it should help firm up supports on moves approaching US$0.6580/0.66.
Key MoversA slight risk-off bias and higher US treasury yields helped the USD rebound through trade on Tuesday, advancing against major counterparts. Mixed domestic data sets coupled with weaker Chinese activity data and ongoing uncertainty surrounding Debt ceiling negotiations weigh on risk demand propping up the USD. The yen and euro both tracked lowed while softer than anticipated UK Labour data prompted a larger fall for the GBP. Surprisingly Canadian CPI edged higher in April, up 4.4% year on year, elevating calls for the Bank of Canada to resume tightening. The promise of higher rates helped the CAD outperform, jumping to mark intraday highs just short of US$0.7460.
Attentions turn now to Japanese Q1 GDP data and US housing starts for direction through Wednesday.
- AUD/USD: 0.6580 - 0.6730 ▼
- AUD/EUR: 0.6080 - 0.6180 ▼
- GBP/AUD: 1.8620 - 1.8820 ▲
- AUD/NZD: 1.0650 - 1.0750 ▼
- AUD/CAD: 0.8950 - 0.9050 ▼