AUD continues to trade above 71 US cents

Daily currency update

The Australian dollar is steady this morning trading just above 70 US cents and eases from a two-month peak on modest USD strength. On Friday we saw the AUD/USD pair advance for the third straight day, but retraced from the two-month high, reached at 0.7136, so far clinging above the 0.7100 mark, which could open the door for further gains. From a technical perspective, the AUD/USD’s first resistance would be the August 11 high at 0.7136. Once cleared, the next stop would be the 200-day EMA, followed by the May 5 high at 0.7266. Looking ahead this week and on Tuesday the Reserve Bank of Australia will release the Monetary Policy Meeting Minutes. A detailed record of the RBA Reserve Bank Board’s most recent meeting, providing in-depth insights into the economic conditions that influenced their decision on where to set interest rates. On Wednesday the Australian Bureau of Statistics will release the quarterly Wage Price Index a leading indicator of consumer inflation – when businesses pay more for labor the higher costs are usually passed on to the consumer. On Thursday we will see the Unemployment Rate figures which are forecast to add 26.5K jobs and remain at 3.5%.

Key movers

In the United States on Friday we saw the release of the University of Michigan’s Consumer Sentiment. The August reading exceeded market expectations at 55.1, higher than the 52.5 forecasted by the street. Meanwhile, consumer inflation expectations for 1-year decreased from 5.2% to 5%, while 5-year rose above 3%, from 2.9%. The Producer Price Index posted a similar outcome, rising by 9.8% YoY in the same month. Stocks finished the week on solid footing, with traders assessing whether an inflation slowdown could soon make the Federal Reserve reduce the pace of its most-aggressive tightening campaign in decades and prevent a hard landing. The S&P 500 had a fourth straight week of gains, the longest such run since November. The gauge recouped more than 50% of the losses it notched between its January peak and June. Looking ahead this week in the United States and on Wednesday we will see the release of July Retail Sales, foreseen up by a modest 0.1%, the primary gauge of consumer spending, which accounts for the majority of overall economic activity. On Thursday the US Federal Reserve will release the Minutes of its latest monetary policy meeting providing in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates. Finally, on Friday we will see the release of US Existing Home Sales an annualised number of residential buildings that were sold during the previous month, excluding new construction.

Expected ranges

• AUD/USD: 0.7000 – 0.7200 ▲
• AUD/EUR: 0.6800 – 0.7000 ▲
• GBP/AUD: 1.6900 – 1.7100 ▼
• AUD/NZD: 1.0900 – 1.1100 ▲
• AUD/CAD: 0.9000 – 0.9200 ▲