Daily currency update

The Australian dollar is steady this morning when valued against the US dollar trading just above US$0.69. On the back of a fall in US equities, the Australian dollar dropped to US$0.6903 early in the session before reaching a six-day high of US$0.6964. Since last Friday, AUDUSD is moving sideways between US$0.6900 and US$0.6960 with a modest bullish bias, still unable to move significantly away from the 2-year low at US$0.6823 it reached in May. On the data front, there were no scheduled releases yesterday. Looking ahead today we will see the release of May’s retail sales numbers. A strong retail beat will boost the case for another aggressive move by the RBA in July after their outsized 50-bps hike. On a technical level this week the short-term outlook for the Australian dollar has improved. The next resistance level is at US$0.6990. Whereas a decline will push the Australian dollar back under US$0.6870.

Key movers

Overnight US equities are down 2-3% while the USD is broadly stronger. US equity markets opened stronger but then got whacked by a reality check after some weak economic data and the S&P500 is currently down 1.8% with the Nasdaq index down 2.6%. On the data front yesterday Consumer Confidence fell for a second consecutive month in June falling to its lowest point in nearly a decade. Expectations have now fallen well below a reading of 80, suggesting weaker growth in the second half of 2022 as well as a growing risk of recession by year’s end. Looking ahead this week in the US, attention will likely continue to be on how the Federal Reserve evaluates the current outlook between high inflation and recession fears. Regarding data, the Personal Consumption Expenditures (PCE report) on Thursday will be the most important followed by the ISM Manufacturing on Friday which is a leading indicator of economic health. On Wednesday Federal Reserve Chair Jerome Powell will speak as he attends the ECB Forum on Central Banking.

Expected ranges

  • AUD/USD: 0.6800 – 0.7000 ▼
  • AUD/EUR: 0.6450 – 0.6650 ▼
  • GBP/AUD: 1.7550 – 1.7750 ▲
  • AUD/NZD: 1.1065 – 1.1074 ▲
  • AUD/CAD: 0.8750 – 0.8950 ▲

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