Home Daily Commentaries Aussie dollar trading near 0.73 US cents

Aussie dollar trading near 0.73 US cents

Daily Currency Update

The Australian dollar is slightly stronger this morning when compared to the greenback trading near the 0.7300 level after the Federal Open Market Committee (FOMC) raised interest rates for the first time since 2018 as prices have increased by 7.9% in the year through February marking the highest rate of inflation in 40 years. On the data front yesterday we saw the release of the monthly Westpac Leading Index which is designed to predict the direction of the economy.  The six-month annualised growth rate in the Westpac-Melbourne Institute Leading Index which indicates the likely pace of economic activity relative to trend three to nine months into the future grew from -0.5% in January to -0.25% in February.

Looking ahead today all eyes will be on Australian Unemployment Rate figures released by the Australian Bureau of Statistics which forecast a fall in unemployment to 4.1% whilst adding roughly 40.3K new jobs.  From a technical perspective, the AUD/USD pair is currently trading at 0.7286. We continue to expect support to hold on moves approaching 0.7140 while now any upward push will likely meet resistance around 0.7300.

Key Movers

The key movement overnight the Federal Open Market Committee (FOMC) released its policy update and lifted the Fed Funds rate by 25bps to a range of 0.25-0.5%, as widely anticipated and marking the first rate hike since 2018. The Federal Open Market Committee (FOMC) is projecting six more rate rises this year. Ahead of the Fed announcement, markets were trading with a positive risk tone, supported by optimism on eventual peace in Ukraine and the Chinese government’s support for the equity market.

On the economic data front, US retail sales were weak in February, with the ex-autos and gas core figure falling 0.4% m/m, well below expectations, but this followed an upwardly revised surge higher in January.  The net result will be a strong Q1 figure overall, even if March is soft as well, and the Atlanta Fed’s GDP which now estimate lifted from 0.5% to 1.2% after adding in the retail sales report. Homebuilder sentiment measured by the NAHB housing market index underwhelmed, falling to a six month low of 79, and this should continue to fall on the back of rising mortgage rates.

Expected Ranges

  • AUD/USD: 0.7200 - 0.7400 ▲
  • AUD/EUR: 0.6500 - 0.6700 ▲
  • GBP/AUD: 1.7900 - 1.8100 ▼
  • AUD/NZD: 1.0550 - 1.0750 ▲
  • AUD/CAD: 0.9100 - 0.9300 ▲