AUD claws back losses amid reports of ceasefire
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Daily Currency Update
The Australian dollar advanced Tuesday pushing back above US$0.65 following reports a ceasefire between Israel and Iran has been brokered. Equity markets and risk assets rallied with US treasury yields falling as risk sentiment improved. The AUD climbed of intraday lows near US$0.6450 to mark intraday highs just short of US$0.6520 before settling nearer US$0.6480. Softer US consumer confidence data and dovish commentary from Fed Chair Jerome Powell helped add a floor underneath the AUD as the USD faced mounting downside pressure. The AUD also edged higher against the euro, bouncing off 0.5580 and breaking back through 0.56 while losing ground to the pound extending its slide below 0.48.Our attention now turns to domestic CPI inflation data. We expect a modest decline with annual inflation sliding toward 2.3%, down from 2.4%. a softer read will elevate calls for further RBA rate cuts. Offshore we look to NZ trade balance numbers, the Bank of Japan meeting minutes and commentary from Fed Chair Jerome Powell.
Key Movers
News of a ceasefire between Israel and Iran helped drive gains across equity markets and risk assets while oil prices and the USD fell. The USD DXY index gave up 0.5% led by gains across the CHF, JPY and risk assets while the NOK and CAD both retreated as oil prices slid. WTI crude is now down below $64 while Brent Crude is back below $67. Risk sentiment continues to drive direction yet US yields fell following softer consumer confidence data and dovish commentary from Fed Chair Jerome Powell.Our attentions remain attached to geopolitical tensions and while a ceasefire has been declared reports of missiles still flying continue ensuring uncertainty and volatility remain elevated.
Expected Ranges
- AUD/USD: 0.6380 - 0.6530 ▲
- AUD/EUR: 0.5550 - 0.5650 ▲
- GBP/AUD: 2.0850 - 2.1050 ▲
- AUD/NZD: 1.0780 - 1.0850 ▲
- AUD/CAD: 0.8880 - 0.8980 ▲