Aussie forced lower as the Greenback dominates
|AUD - Australian Dollar
The Australian Dollar extended is weekly decline to reach a low of 0.6995 overnight but managed to recover marginally to open this morning at 0.7004. The Greenback surged against a basket of currencies following the bipartisan debt ceiling agreement overnight and tempering of the chances of a 50BP rate cut with the Aussie no exception. Adding to the woes for the commodity-linked currency was the RBA’s assistant Governor Kent who spoke early on Tuesday. Kent commented that the RBA is ready to adjust its policy to meet their set targets if required, leaving the door open for further rate cuts. Kent did note however that the chance of the central bank introducing quantitative easing was very low.
Moving into Wednesday, the Aussie is set to enjoy a relatively quiet day on the economic calendar with only Flash Manufacturing PMI to digest.
Key Movers
The Great British Pound hit a fresh weekly low as domestic data and Boris Johnson led the Stirling to a third consecutive day in the red. Opening this morning at 1.2436, the Pound initially stumbled on the CBI’s industrial trend survey which showed that business optimism fell sharply in June, indicating that domestic industry was facing its biggest slowdown since the GFC. Adding to the Stirling’s woes was Boris Johnson’ confirmation as the next Prime Minister of the United Kingdom. Given he has stated that he would exit the UK with or without a deal with the EU on October 31st, the chances of a hard Brexit have increased.
The United States Dollar had a much rosier story than the Pound overnight as it rose 0.45% to 97.7 on the US Dollar Index. Strengthened by a number of events, the Greenback initially benefited from the bipartisan extension of the US debt limit but also found some momentum from fewer calls favouring a 50BP rate cut by the federal reserve. With the positive momentum behind the Greenback, the Dollar enjoyed its strongest day of the week.
Expected Ranges
AUD/CAD: 0.9147 - 0.9235 ▲
AUD/EUR: 0.6229 - 0.6321 ▲
GBP/AUD: 1.736 - 1.799 ▼
AUD/NZD: 1.0403 - 1.0486 ▼
AUD/USD: 0.6974 - 0.7049 ▲
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