AUD rebound broken as US dollar buoyed by stronger services data
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Daily Currency Update
The Australian dollar resurgence faltered through trade on Thursday, amid stronger than expected US services data and a revision in Fed rate cut expectations. With little of note on the domestic docket, the AUD tracked sideways early, bouncing between US$0.6730 and US$0.6750, before sliding back toward US$0.67 overnight. Risk sentiment faltered as US services PMI data printed above expectations and commentary from Fed officials at the Jackson Hole Symposium on Monetary Policy suggests any correction in rates will be slow and measured. Markets were forced to reprice rate cut expectations allowing US treasuries to edge higher, dragging the US along for the ride. Having touched highs above US$0.6760, there were signs the AUD was entering overbought territory and we expect the AUD will struggle on moves approaching US$0.68 ahead of US non-farm payrolls for August and the September Fed policy meeting.Our attentions turn now to Japan CPI data and commentary from BoJ governor Ueda, while Fed President Powell addresses attendees at the Jackson Hole Symposium.
Key Movers
Better than expected US PMI data and commentary out of the Jackson Hole Symposium helped the US dollar retrace some of the week's early losses and advance against the majority of majors. US Service sector PMI data printed well above expectations; further alleviating fears the US is running headlong toward recession. The stronger print helped fuel a rise in US treasuries with gains extended following commentary from Fed speakers in Jackson Hole. Speakers doused calls for a 50-point rate cut in September and appeared at pains to stress any easing in monetary policy will be “slow”, “methodical” and “gradual”. Market pricing paired back rate cut expectations both for the September 17 meeting and through the end of the year. The DXY index advanced 0.5%, while the GBP was the only major to hold its ground against the USD, buoyed by a modest improvement in Manufacturing and Service PMI’s. Having tested a break above 1.3125, sterling opens this morning just below 1.31, while the euro has retreated back below 1.1150 and the yen again gave up 146.Our attentions turn now to Japan CPI data and commentary from BoJ governor Ueda, while Fed President Powell addresses attendees at the Jackson Hole Symposium.
Expected Ranges
- AUD/USD: 0.6620 - 0.6760 ▼
- AUD/EUR: 0.5980 - 0.6080 ▼
- GBP/AUD: 1.9300 - 1.9600 ▲
- AUD/NZD: 1.0880 - 1.1020 ▼
- AUD/CAD: 0.9100 - 0.9200 ▼