Aussie dollar continues to trade above US$0.65
Daily Currency Update
The Australian dollar is slightly higher this morning when valued against the Greenback. The Aussie traded higher on Friday against the Greenback as the pair remains capped on the upside despite hitting a new month high at 0.6595, as a key technical resistance level that acted like a magnet drove the exchange rate toward the 0.6550s area. At the time of writing, the AUD/USD trades at 0.6559, up 0.06%. Last week the Reserve Bank of Australia (RBA) ruled out another cash rate increase because it is not sufficiently confident inflation is on track to fall into its target range within the next couple of years. The RBA forecasts annual consumer price inflation, currently 4.1 per cent, will fall to 2.8 per cent in December 2025. But in the minutes of the RBA’s February 5-6 monetary policy meeting, board members noted that uncertainty about the economy was high, and the cost of not achieving low inflation within the next couple of years was very high. Markets expect the RBA’s next move will be a cut. Traders are fully priced for a 0.25 percentage point rate decrease at the RBA’s September 23-24 board meeting.Looking ahead this week and on Wednesday Australian Bureau of Statistics will release the latest Consumer Price Index (CPI) which is expected to increase from the previous month 3.4% to 3.6%. Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate. On Thursday we will see the release of the monthly Retail Sales figures which is the primary gauge of consumer spending, which accounts for the majority of overall economic activity. Finally, on Friday the RBA will release the Index of Commodity Prices which is a leading indicator of the nation's trade balance with other countries because rising commodity prices boost export income.
Key Movers
On the US front, US jobless claims dropped to their lowest level in a month. Initial Jobless Claims for the week ending February 17 decreased by 12K to 201K, below estimates of 218K, and the previous week 213K. This suggests the labor market remains tight, usually seen as a sign that might pump inflation higher. In the meantime, business activity in the United States (US) moderated in February, according to the S&P Global report. The Services and Manufacturing PMI remained at expansionary territory, with the former printing 51.3 below estimates and January’s figures, while the latter expanded at a 51.5 pace, exceeding forecasts and last month’s 50.7. Therefore, the Composite Index dipped from 52 to 51.4.The S&P 500 (SPX) index was broadly unchanged to close the session at 5,088.8. The Dow Jones (DJIA) climbed 0.16% to end at 39,131.53, while the Nasdaq (IXIC) lost 0.28% to finish at 15,996.82. The Technology Sector started off the day as the best-performing major S&P 500 sector on Friday, rising nearly 1% before falling back to end the day down 0.27%. Nvidia Corp. (NVDA) initially gained more than 3% on Friday to trade near $823.68 before pulling back in the back half of the trading day to finish at $788.17, up around 0.36% at the closing bell. The chipmaker had reported on Wednesday that earnings per share topped $5.16 versus the $4.64 forecast, while revenue climbed to $22.10 billion compared to the expected $20.62 billion.
Expected Ranges
- AUD/USD: 0.6450 - 0.6650 ▲
- AUD/EUR: 0.5950 - 0.6150 ▲
- GBP/AUD: 1.9150 - 1.9350 ▼
- AUD/NZD: 1.0450 - 1.0650 ▼
- AUD/CAD: 0.8750 - 0.8950 ▼