Daily Currency Update
The Australian dollar is weaker this morning when valued against the Greenback currently trading at 0.6606 at time of writing. The AUD/USD declined in Friday's session despite the Reserve Bank of Australia's (RBA) hawkish policy outlook. The decline was primarily attributed to the appreciation of the US dollar amid less-dovish sentiment surrounding the Federal Reserve (Fed) and strong University of Michigan (UoM) sentiment data, which overshadowed soft Durable Goods figures. Looking ahead this week on the local front and on Wednesday the Australian Bureau of Statistics will release the latest Consumer Price Index (CPI). 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 and building approvals. Finally, on Friday we will see the release of the monthly Producer Price Index (PPI) which is another leading indicator of consumer inflation - when producers charge more for goods and services the higher costs are usually passed on to the consumer.
Key Movers
The US dollar Index (DXY), which gauges Greenback’s value against six major currencies, hovers near 104.00. The downside in the US dollar appears to be limited due to growing expectations that the Federal Reserve’s (Fed) policy-easing approach would be more gradual than what was previously anticipated for the remaining year and that former US President Donald Trump will win national elections on November 5. The US economy remains robust with GDPNow tracking third-quarter growth at 3.4%. The strong economic outlook might push the Federal Reserve (Fed) to adopt a more cautious stance. Investors, meanwhile, are confident of two cuts by the end of 2024. The US economy remains robust with the Atlanta Fed's GDPNow model tracking Q3 growth at 3.4% and the New York Fed's Nowcast model projecting 3.0% growth for Q3 and 2.6% growth for Q4. Dow's stock price has decreased 8.1% so far this year, much less than the 12.4% advance registered by the overall Dow Jones Industrial Average (DJIA) index. On Friday, the DJIA fell by 0.6% to close at 42,114 points. The three leaders were Intel (INTC), Salesforce (CRM) and Microsoft (MSFT), while the three laggards were McDonald's (MCD), Goldman Sachs (GS) and Dow (DOW).
Expected Ranges
- AUD/USD: 0.6500 - 0.6700 ▼
- AUD/EUR: 0.6000 - 0.6200 ▼
- GBP/AUD: 1.9400 - 1.9600 ▲
- AUD/NZD: 1.0850 - 1.1050 ▼
- AUD/CAD: 0.9050 - 0.9260 ▼