AUD/USD holds above 67 US cents

Daily currency update

The Aussie dollar is slightly weaker this morning when valued against the greenback amid a mixed sentiment, with US equities wavering due to Federal Reserve (Fed) officials moderating the increase of borrowing costs. Worries about the worsening COVID-19 situation in China keep a lid on the recent optimistic move in the markets, which, in turn, acts as a headwind for the risk-sensitive Aussie. In fact, China announced strict curbs in several major cities in the wake of a record-high jump in daily COVID-19 cases. This in turn adds to concerns about a further slowdown in economic activity and tempers investors’ appetite for perceived riskier assets. Markets may open with a more cautious tone this morning after the weekend protests, which could lead to a government crackdown on protesters. Looking ahead this week investors are shifting their focus toward the release of Retail Sales data. The economic data is expected to decline to 0.3% vs. the prior release of 0.6% on a monthly basis. A decline in consumer demand would delight the Reserve Bank of Australia (RBA) as lower retail sales will force the producers to lower their prices to accelerate demand. This might result in a decline in inflation ahead. On Friday RBA Governor Philip Lowe is due to participate in a panel discussion titled “Growth and Inflation Dynamics” at the Bank of Thailand 80th Anniversary Conference, in Bangkok. Volatility is often experienced during his speeches as traders attempt to decipher interest rate clues.

Key movers

On Friday US markets were much quieter than usual on Friday, with many investors taking a long weekend for Thanksgiving. US equities were little changed on a shortened trading session. The S&P50 was flat on the day and the NASDAQ was down 0.5%. The S&P500 was up 1.5% on the week, now trading near its highest level in 2½ months. Market sentiment has been notably less pessimistic since the recent lower-than-expected US Consumer Price Index (CPI) print. Looking ahead this week in the US and on Wednesday Federal Reserve Chair Jerome Powell is due to speak about the economic outlook, inflation, and the labor market at the Brooking Institution, in Washington DC. On Thursday we will see the release of US ISM Manufacturing PMI (with the market looking for the first sub-50 reading for the cycle). Above 50.0 indicates industry expansion, below indicates contraction. Finally, on Friday we will see the release of the US Non-Farm Employment Change (with the market looking for 200k job growth and an unchanged unemployment rate of 3.7%).

Expected ranges

• AUD/USD: 0.6600 – 0.6800 ▼
• AUD/EUR: 0.6350 – 0.6550 ▼
• GBP/AUD: 1.7825 – 1.8025 ▲
• AUD/NZD: 1.0650 – 1.0850 ▼
• AUD/CAD: 0.8850 – 0.9050 ▲