AUD creeps higher as USD marks 3 year low
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Daily Currency Update
The AUD edged higher against the USD on Thursday, yet underperformed when valued back against most other majors as rising tariff tensions weighed on investor sentiment. President Trump announced the administration would be sending letters within the next two weeks to all those countries deemed not to be dealing in good faith informing them of the tariff structure to which they will be subjected. His comments re-ignited tensions and further muddied the waters surrounding international trade. The AUD slipped below US$0.65, tracking lower through the domestic session to mark lows just south of US$0.6480. Weaker than expected US PPI data for May and an uptick in weekly jobless claims forced a flattening across US treasury yields, driving the US dollar lower and allowing the AUD to recover the days earlier losses. The AUD then found support overnight climbing back through US$0.65 and back toward resistance at US$0.6530. While stronger against the USD, the AUD was among the major laggards outpaced by the euro and JPY. Having eyed a break above 0.57-euro earlier in the week, the AUD has retreated below 0.5650, testing supports at 0.5620, while also slipping under 93.50 against the yen.Our attentions now turn to NZ PMI data, Japan industrial production numbers, US consumer sentiment data and the G7 leaders’ summit in Alberta Canada. As trade tensions are again on the rise, the 3-day summit may prove key in shaping the near-term risk narrative.
Key Movers
The US dollar has again underperformed, losing ground to all G10 currencies following softer than anticipated macro data and ongoing tariff uncertainties. May's PPI data showed little immediate impact from tariffs, with only a marginal increase in price pressures, affording the Fed few barriers to cutting rates in response to a slowdown in activity across the economy. US weekly jobless claims also rose more than anticipated, with 248,000 claimants presenting for unemployment benefits. The 4-week average has risen steadily, with continuing/repeated claims touching their highest level in four years, highlighting the increasing difficulty in finding a job. Troubling macroeconomic markers and a softer bond auction pushed treasury yields lower and drove the dollar to its lowest level in more than three years. The Scandinavian currencies and Swiss franc led gains, with the euro and yen enjoying a 1% uptick, while the GBP and CAD were among the laggards. The pound underperformed after GDP data showed a contraction in activity.Our attentions now turn to Japan industrial production numbers, US consumer sentiment data and the G7 leaders’ summit in Alberta Canada. As trade tensions are again on the rise, the 3-day summit may prove key in shaping the near-term risk narrative.
Expected Ranges
- AUD/USD: 0.6450 - 0.6550 ▲
- AUD/EUR: 0.5580 - 0.5680 ▼
- GBP/AUD: 2.0750 - 2.1000 ▲
- AUD/NZD: 1.0720 - 1.0820 ▼
- AUD/CAD: 0.8850 - 0.8950 ▼