AUD trades below 75 U.S. cents

Daily currency update

The Australian dollar is weaker this morning when valued against the greenback. Last week we saw the Aussie dollar surge through 0.76 US cents on the heels of a hawkish RBA policy update. As expected, policymakers left interest rates at record lows, however a subtle shift in rhetoric and a hawkish tilt fuelled expectations the board will raise rates in the coming months. Markets have long expected that the RBA will need to give up its patient approach driving expectations of a June rate rise is now firmly on the table. On Friday the great global bond market selloff continued, with the US 10-year rate reaching a fresh three-year high of 2.73%. Against a backdrop of a slightly weaker risk appetite the Australian dollar fell below 75 U.S. cents. On Sunday Australian Prime Minister called the federal election for May 21, starting a six-week campaign pitched as a battle between Labor’s pledge to deliver ‘a better future’ and the Liberal message that it’s a choice “between a strong economy and a Labor opposition that would weaken it”. On the data front this week on Tuesday we will see the release of the NAB Business Confidence, a survey of about 350 businesses that asks respondents to rate the relative level of current business conditions.  On Wednesday we will see the release of Westpac Consumer Sentiment, a survey of about 1,200 consumers that asks respondents to rate the relative level of past and future economic conditions, employment, and climate for major purchases.  On Thursday all eyes will be on Australia’s unemployment rate which is forecast to fall from 4% to 3.9% adding over 30k jobs.

Key movers

Key mover on Friday we saw global 10-year rates around the world rose to fresh multi-year highs which continues to support the greenback. The US 10-year rate reached its highest level in nearly two years of 2.73%, before ending at 2.70%, up 32bps for the week. The S&P500 closed down 0.3%, while the Nasdaq index fell 1.3%, some nerves evident as rates continue their relentless rise. The S&P500 showed a 1.3% fall for the week. On the data front on Friday US Factory Orders were down 0.5% MoM in February, while Initial Jobless Claims for the week ended April 1 improved to 166K.  Looking ahead this week, the US will publish the March Consumer Price Index, expected to reach 8.3% YoY. The core reading is foreseen at 6.6%, up from the previous 6.4%. The country will also release March Retail Sales and the preliminary estimate of the April Michigan Consumer Sentiment Index.

Expected ranges

• AUD/USD: 0.7350 – 0.7550 ▼
• AUD/EUR: 0.6750 – 0.6950 ▼
• GBP/AUD: 1.7350 – 1.7550 ▲
• AUD/NZD: 1.0750 – 1.0950 ▲
• AUD/CAD: 0.9250 – 0.9450 ▼