Home Daily Commentaries AUD/USD falls 0.5% to hold just above 0.7

AUD/USD falls 0.5% to hold just above 0.7

Daily Currency Update

The Australian dollar continued its downward trajectory on Friday, falling 0.5% to open this morning at 0.7054. It was again concerns over the global growth outlook and expectations of aggressive Fed tightening that has undermined support for commodity currencies such as the Aussie.

Starting locally, the Aussie first turned to the RBA’s Monetary Policy Statement on Friday which sent the Aussie to a fresh intraday low. Ultimately the RBA revised down growth forecasts and expects a 1.75% cash rate in 2022 amidst a sharp rise in inflation, a ‘stagflation’ scenario. The downbeat RBA set the tone for the day as more bad news for the Aussie rolled off the press. Industrial Metals were also lower with Copper falling 0.8%, Zinc down 8.2% and Aluminium was 6.1% lower which certainly didn’t help the Aussie find its feet. Equity Markets also reflected the risk-off tone with the S&P500 falling 0.6% and the Nasdaq falling 1.4%. Overall, risk-off sentiment amidst global growth concerns drove the Aussie's movements further into the red on Friday.

Moving into Monday, the Aussie is set to enjoy a quiet day on the economic calendar but will certainly tune in for China’s Trade Balance announcement later today.

Key Movers

The US dollar touched a fresh 20-year high on Friday before tempering gains to only record a 0.05% uplift to 103.71. Nevertheless, it was a strong showing for the US dollar which continues to be aided by risk-off sentiment as well as expectations of aggressive Fed tightening. The greenback led the way on Friday as Non-Farm Payroll and the Unemployment Rate were released with few changes. The NFP report recorded a 428k increase in jobs in April, a touch higher than the markets expected 380k while the unemployment rate continued to hold steady at 3.6% despite expectations that it would drop to 3.45%. Nevertheless, the US labour market continues to be extremely tight and it will be unlikely to upset the Fed’s expected 50BP rate hike next month which kept the greenback well supported.

Expected Ranges

  • AUD/USD: 0.7007 - 0.7092 ▼
  • AUD/EUR: 0.6649 - 0.6730 ▲
  • GBP/AUD: 1.7384 - 1.7595 ▼
  • AUD/NZD: 1.0960 - 1.1092 ▲
  • AUD/CAD: 0.9051 - 0.9160 ▼