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AUD underperforms amid quiet start to the week

Tuesday 29 June, 2021

Daily Currency Update

The Australian dollar edged back toward 0.7550 through trade on Monday in what was a cautious start to the week. Equities drifted sideways and treasury yields shifted downward while commodity currencies underperformed. Markets appear to have adopted a measured approach to what looks like being a relatively quiet week ahead of Friday’s non-farm payroll print. With little of note on the domestic macroeconomic ticket we expect the AUD will continue edging higher to test a break back through 0.76 US cents. While the AUD remains plagued by near term headwinds fair value estimates still have it trading nearer 0.80 cents, outside this week’s US unemployment print our attentions turn to next weeks RBA policy meeting and rate statement. With a press conference called after the meeting we expect some amendments in either RBA policy or forward guidance which could spark price action.

Key Movers

Price Action across major currencies remained muted through trade on Monday as markets adopted a cautious tone in what promises to be a relatively quiet week ahead of Friday’s US non-farm payroll print. Having given up the post FOMC gains through last week. The US dollar index edged marginally higher as the Euro drifted toward intraday lows near 1.19 while Sterling fell back below 1.39 to touch intraday lows at 1.3870. Our attentions turn from the Fed to the ECB as a divergence in policy expectations within the European Central Banks appears to be forming. Key policy makers have presented contrasting programs of action, pushing for a proactive reduction in Bond Purchases and at the same time warning of the risks of pulling the foot of the accelerator to early. The ECB has previously remained steadfast in its commitment to bond purchases and with markets anticipating a correction in the pace of asset buying in the months ahead any commentary that suggests a move may come sooner rather than later could prompt price action.

Expected Ranges

  • AUD/USD: 0.7480 - 0.7630 ▼
  • AUD/EUR: 0.6290 - 0.6370 ▼
  • GBP/AUD: 1.8270 - 1.8520 ▲
  • AUD/NZD: 1.0720 - 1.0790 ▲
  • AUD/CAD: 0.9280 - 0.9360 ▲