Risk on; return of risk appetite helps AUD push back against recent losses
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Daily Currency Update
The Australian dollar rallied through trade on Tuesday, pushing back above US$0.65 amid a renewed appetite for risk. Sentiment improved and risk demand returned to financial markets allowing the AUD to bounce of lows below US$0.6480 and touch intraday day highs just south of US$0.6550. There is no obvious catalyst for the rebound in risk and markets largely ignored the RBA policy update despite policy makers adopting a more hawkish tone. Officials reinforced the need to remain "remain vigilant to the upside risks to inflation" and refused to rule out the possibility of another rate hike. Governor Bullock pushed back at calls for a rate cut confirming "market pricing for a cut doesn’t align with the board’s current thinking". Rates rose and helped offer the AUD some support before the focus returned to global forces.Our attention now shifts to NZ employment numbers and China trade data as key markers for direction through the domestic session.
Key Movers
Risk sentiment returned to markets yesterday allowing commodity currencies to rebound off lows while forcing a correction across haven assets. The yen underperformed giving up 0.4% and allowing the USD to claw back toward ¥144.80 while the DXY index climbed as the euro and GBP both gave up ground. The pound relinquished more than half a percent, sliding back below US$1.27 while the euro slipped toward US$1.09 before finding support.Our attention now turns to a pretty quiet macro docket with NZ labour market numbers and China trade data dominating the ticket. We expect direction to again be driven by broad global forces and fluctuation in risk sentiment.
Expected Ranges
- AUD/USD: 0.6450 - 0.6600 ▲
- AUD/EUR: 0.5900 - 0.6020 ▲
- GBP/AUD: 1.9300 - 1.9700 ▼
- AUD/NZD: 1.0900 - 1.1000 ▲
- AUD/CAD: 0.8920 - 0.9020 ▲