AUD - Australian Dollar

The Australian dollar shifted lower overnight amid a risk-off backdrop and rebound in the USD. Having extended beyond 0.78 for the first time in over a month the AUD touched intraday highs at 0.7820 late in the domestic session before risk sentiment flipped and investors drove bond yields, equities and commodity currencies lower. Markets largely ignored the RBA minutes yesterday as policymakers offered little in the way of new information, instead our attentions turn to next month's policy meeting. With the domestic recovery well and truly underway and the labour market rebound ahead of schedule we will be looking for any signal the RBA may consider moving forward the timeline of monetary policy normalisation.

The AUD moved steadily lower overnight as the US dollar snapped a 6-day losing streak, forcing the AUD back toward intraday lows at 0.7710. With little in the way of headline data investors appeared hamstrung by a lack of conviction, forced to correct the recent risk-on uptick and moderate gains. Volatility across currency markets remains low and until there is a shift in the underlying narrative we expect the AUD will continue to fluctuate between the current support and resistance handles.

Key Movers

The US dollar snapped a 6-day losing streak on Tuesday, advancing across the board amid a risk-off backdrop. The dollar index advanced 0.3% while the JPY and CHF outperformed as investors shifted away from risk assets toward traditional haven currencies. There appears little catalyst for the risk-off shift with little headline data or change in recent news flows providing a definitive catalyst. Instead, markets appear plagued by a lack of conviction and resigned to maintaining a narrow range in an environment of suppressed volatility. The euro gave up recent gains yet held on to consolidate above 1.20 while the GBP shifted off highs just above 1.40.

Attentions turn to tonight’s Bank of Canada Policy update ahead of tomorrow’s ECB monetary policy statement as markers for direction and global central bank sentiment.

Expected Ranges

AUD/USD: 0.7630 - 0.7820 ▼

AUD/EUR: 0.6350 - 0.6490 ▼

GBP/AUD: 1.7920 - 1.8180 ▲

AUD/NZD: 1.0690 - 1.0840 ▼

AUD/CAD: 0.9690 - 0.9820 ▲

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