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AUD pushes back above 0.72 as aversion to risk abates

Thursday 20 January, 2022

Daily Currency Update

The Australian dollar edged higher through trade on Wednesday amid a broad improvement in risk appetite and the USD softening. Having touched intraday lows at 0.7180 through the domestic session, the AUD climbed steadily overnight punching back through 0.72 US cents. The sell-off across global bonds that has dominated direction through the past few days has paused, affording equity markets some respite while prompting analysts to moderate recent risk aversion. Having touched intraday highs at 0.7240, our attentions turn now to the latest monthly employment data print. We expect the unemployment rate will continue to fall as this latest report affords a backward look at December's labour market performance and largely pre-dates the chaos caused by the Omicron surge. A print at or near 4.4% will be a welcome surprise for the RBA and could add mounting pressure on policymakers to end QE measures when they next meet on February 1.

Key Movers

The USD moved lower through trade on Wednesday as aversion to risk abated and investors looked to stabilise the recent correction across commodity currencies and risk assets. The DXY dollar index fell 0.2% yet found support on moves approaching 95.50. Having pared recent gains, the USD remains largely flat on the year as the euro climbed back above 1.1350 and the pound pushed through 1.36. With little of note on today’s ticket, we expect price action will continue to be dominated by ongoing fluctuations in bond market activity and global rates.

Expected Ranges

  • AUD/USD: 0.7170 - 0.7290 ▲
  • AUD/EUR: 0.6290 - 0.6380 ▲
  • GBP/AUD: 1.8790 - 1.8950 ▼
  • AUD/NZD: 1.0580 - 1.0680 ▲
  • AUD/CAD: 0.8980 - 0.9050 ▲