OzForex Research
OzForex Foreign Exchange
Daily Currency Update
The Australian dollar drifted below 0.72 US cents on Tuesday, continuing to correct lower amid rising uncertainty surrounding the economic impacts of this latest COVID wave and Omicron strain. Consumer confidence marked its largest monthly decline in three decades, tumbling through the first few weeks of January as Australians adjust their spending habits in the face of skyrocketing COVID-19 infections. Restrictions may have been lifted, yet the pandemic continues to preclude consumers from re-engaging in normal economic activity. Confidence fell some 7.6% to start the year as rising Covid cases, extensive testing delays and supply chain stress all weigh on economic function. Having touched intraday highs at 0.7230 the AUD fell below 0.72 in the latter stages of the domestic session marking overnight lows at 0.7170. Despite last week’s foray above 0.73 US cents and uptick in global rates and increased risk aversion have again forced investors to give up AUD gains. We expect the AUD will continue to maintain a narrow trading band, bouncing between 0.70 and 0.7330 through the coming weeks.
Key Movers
The US dollar advanced through trade on Tuesday amid a backdrop of higher global rates and a sustained risk off run. The DXY dollar index advanced 0.5% on the day, pushing back toward 96 as the USD advanced against the majority of major counterparts. The correlation between higher Fed interest rate expectations and a broader risk off narrative appears to be returning, adding support to the USD and driving the EUR and GBP lower overnight. Having touched highs above 1.14, the EUR fell sharply, giving up three quarters of a percent and marking intraday lows at 1.1320, while the GBP slipped back below 1.36. The JPY was the day’s big winner, staving off further deprecation against the USD and a push toward 115 as the up tick in risk aversion helped push investors toward haven assets. Our attentions today turn to UK and Canadian CPI data.
Expected Ranges
- AUD/USD: 0.7070 – 0.7250 ▼
- AUD/EUR: 0.6290 – 0.6370 ▲
- GBP/AUD: 1.8850 – 1.9020 ▼
- AUD/NZD: 1.0580 – 1.0650 ▲
- AUD/CAD: 0.8950 – 0.9050 ▼
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