Home Daily Commentaries Aussie dollar holds below US$0.66

Aussie dollar holds below US$0.66

Daily Currency Update

The Australian dollar is slightly stronger this morning when valued against the Greenback, currently trading at 0.6572 at time of writing. The AUD/USD pair stages a goodish intraday recovery from its lowest level since August 8, around the 0.6535 region touched earlier this Wednesday and for now, seems to have snapped a three-day losing streak. On the data front yesterday, price pressures are easing off, with Australia's annual inflation rate falling to 2.8 per cent, down from 3.8 per cent mid-year, slightly lower than expectations. It's the lowest annual inflation rate in three and a half years. According to the Australian Bureau of Statistics (ABS), prices rose by 0.2 per cent in the September quarter, compared to the 1 per cent rise in the three months through June. The quarterly rise is the lowest outcome since the June 2020 quarter fall, which occurred during the COVID-19 outbreak and was driven by free childcare. Goods inflation declined from 3.2 per cent annually to 1.4 per cent, as a result of the electricity and fuel price falls. The Reserve Bank has forecast the headline annual rate of inflation to fall to 3 per cent by the end of 2024, but has tipped the trimmed mean to remain above its 2-3 per cent target band at 3.5 per cent. Looking ahead to the rest of the week and tomorrow 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 measures the value of the USD against a basket of six currencies, lost ground on Wednesday following the release of mixed economic data. September’s ADP Employment Change report exceeded market expectations in October, but a downward revision in third-quarter GDP growth made the USD tumble. Private sector employment in the US rose 233,000 in October and annual pay was up 4.6%, the Automatic Data Processing (ADP) reported on Wednesday. This reading followed the 159,000 increase (revised from 143,000) recorded in September and surpassed the market expectation of 115,000 by a wide margin. The US economy grew at an annualised rate of 2.8 per cent in the third quarter, in the latest sign American consumers remain resilient ahead of the US presidential election. The data on Wednesday from the Bureau of Economic Analysis showed GDP growth fell slightly short of economists’ estimates for a 3 per cent expansion and was just shy of the 3 per cent rate registered the previous quarter. The GDP figures come a week before the Federal Reserve is set to meet to decide on interest rates, having kicked off its easing cycle last month with a larger-than-usual half-point cut. Wednesday’s report, showing the continued streak of GDP growth, reflected the willingness of American consumers to keep opening their wallets, despite lingering inflation pressures. The CME Group’s Fed Watch tool shows a 96.3% chance of a quarter-point rate cut by the Fed next week, up from 92% on Tuesday. The chances of another 25 bps cut in December have declined below 70% from 76.6% before the data releases. Gold price (XAU/USD) is pulling back after having reached fresh record highs Wednesday. Immediate resistance is the intra-day high at $2,780, ahead of the $2,800 level. Support levels are the previous top at $2,760 and $2,730.

Expected Ranges

  • AUD/USD: 0.6500 - 0.6700 ▲
  • AUD/EUR: 0.5950 - 0.6150 ▲
  • GBP/AUD: 1.9600 - 1.9800 ▼
  • AUD/NZD: 1.0900 - 1.1100 ▲
  • AUD/CAD: 0.9050 - 0.9250 ▼

Written by

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market. He started his foreign exchange career with OFX more than a decade ago, as a private dealer catering to individual clients. He later transitioned to the corporate sector, assuming the position of Corporate Senior Relationship Manager. What truly excites Brett is the opportunity to engage with people, supporting their business growth and sharing in their successes.