Home Daily Commentaries AUD pushes off 3 month lows amid RBA statement and improved China Sentiment

AUD pushes off 3 month lows amid RBA statement and improved China Sentiment

Daily Currency Update

The Australian dollar crept back above US$0.65 Tuesday, bolstered by a hawkish RBA rate statement and an upturn in Chinese and Hong Kong stocks. The AUD managed a partial reversal of Friday and Monday’s post-Federal Open Market Committee sell-off, bouncing off intraday lows below US$0.6478 to mark session highs at US$0.6521. A sharp turnaround on Hong Kong and Chinese stock helped prop up risk appetite while the RBA unaspiringly left rates on hold at 4.35%, yet affirmed their commitment to quashing inflation, refusing to be drawn on when conditions would loosen. In her first post-meeting press conference RBA Governor Bullock stressed the importance that forecasts were based on technical assumptions and that a 50-basis point reduction in H2 should not be construed as forward guidance. Markets adjusted pricing expectations anyway dialing back expectations for cuts and pairing expectations for a first rate cut in June. With implied monetary policy and a stronger Chinese yuan key to any consolidated extension back toward US$0.67 and above Tuesday's RBA update and Asian stock recovery helped firm AUD fortunes and halt the 2024 downturn. We expect some support on moves below US$0.65 as the market has now adjusted expectations for Fed rates. We expect ample volatility in response to changes in rate expectations and the timing and trajectory of monetary policy change throughout the year.

Key Movers

The USD slipped through trade on Tuesday as markets appeared content in sitting back, taking stock and partially reversing some of the gains won in the post non-farm payroll and Federal Open Market Committee rally of last week. The JPY, GBP, CAD and euro all enjoyed small gains. With just 2nd tier data on hand, markets responded to comments from Fed officials Neel Kashkari and Loretta Mester. While both were at pains to say the Job is not done yet, they suggested they expected to be comfortable in cutting rates later this year as inflation moves toward the 2% target over the next 6 months. Equity performance was mixed and US treasuries were choppy moving lower following a 3-year note auction. Yields were lower across the curve weighing on the USD. With just 2nd tier data on hand through trade today our eyes shift to Thursday's unemployment claims report as another key marker of labour market performance.

Expected Ranges

  • AUD/USD: 0.6470 - 0.6600 ▲
  • AUD/EUR: 0.6000 - 0.6100 ▲
  • GBP/AUD: 1.9200 - 1.94 ▼
  • AUD/NZD: 1.0680 - 1.0780 ▲
  • AUD/CAD: 0.8750 - 0.8830 ▲

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.