AUD - Australian Dollar
The Australian dollar slipped below 0.77 US cents on Tuesday, hampered by a sustained risk-off move and a downturn in key commodity prices. Markets largely ignored the RBA’s June meeting minutes, with little additional guidance contained within the meeting notes. Investors have flagged next month's meeting as a pivot point in forward guidance, anticipating policymakers will announce an amendment in the size of monthly bond purchases while maintaining the current yield curve target. Instead, the AUD came under pressure as copper prices fell 4% on reports that China will release some of its stockpile in a bid to control commodity prices. Copper prices have fallen 11% since the mid-May high and while still historically elevated may struggle to hold onto current levels through the weeks ahead. Having slipped below 0.77 US cents, the AUD touched intraday lows at 0.7674 before creeping higher into this morning’s open.
The AUD continues to face near term headwinds and while supported on moves approaching 0.7670/80 there is scope to suggest a sustained risk-off run could force the currency toward 0.7630/0.7580. Attentions today turn to the FOMC meeting and press conference. We anticipate direction will remain muted in the lead up as investors keenly await any suggestion the Fed has begun discussing the tapering of bond purchases while updating their interest rate projections.
Key Movers
The US dollar crept higher through trade on Tuesday amid a more cautious backdrop and increase demand for haven assets. Risk aversion has allowed the CHF and JPY to outperform this week, while the euro also found support creeping higher. Commodity currencies are the days big losers, with the CAD following the AUD and NZD lower despite an uptick in oil prices. Brent Crude Oil prices rose 1% on the day, touching their highest level in two years at 73.60 a barrel. With supply constrained and demand increasing, there is scope to suggest oil prices will continue to rise, with some analysts suggesting $100 a barrel is not out of the realm of possibility.
Our attentions turn now to the FOMC meeting. While we expect the Fed will maintain the current policy platform, there is a growing expectation policymakers will at least begin the discussion of tapering bond purchases while bringing forward interest rate expectations. We are keenly attuned to the Fed’s dot plot as a key market of possible interest change. Despite the optimism in some circles, we anticipate the Fed will maintain its current rhetoric and at best offer flimsy guidance on the conditions required to prompt a change in policy.
Expected Ranges
AUD/USD: 0.7630 - 0.7780 ▼
AUD/EUR: 0.6290 - 0.6360 ▼
GBP/AUD: 1.8180 - 1.8440 ▲
AUD/NZD: 1.0750 - 1.0820 ▲
AUD/CAD: 0.9340 - 0.9390 ▲
IMPORTANT: This information has been prepared for distribution over the internet and without taking into account the investment objectives, financial situation and particular needs of any particular person. Oz Forex Foreign Exchange makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites. Please read our Product Disclosure Statement and our Financial Services Guide.
Regulated in Australia by ASIC (AFS Licence number 226 484)
© 2010 Copyright Oz Forex Foreign Exchange Pty Ltd ABN 65 092-375-703
OzForex Foreign Exchange Services
Member of FOS (Financial Ombudsman Service)
Full Member of AFMA (Australian Financial Markets Association)
Recommended Content
Editors’ Picks
AUD/USD holds above 0.6500 in thin trading
The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.
EUR/USD comfortable below 1.0800 lower lows at sight
The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
Google starts indexing Bitcoin addresses
Bitcoin address data is live on Google search results after users realized on Thursday that the tech giant started indexing Bitcoin blockchain data. However, mixed reactions have followed the tech giant's reversed stance on the cryptocurrency.
A Hollywood ending for fourth quarter GDP
The latest revisions put Q4 GDP at 3.4%, the second fastest quarterly growth rate in two years. Much of the upside was attributable to stronger consumer spending, yet fresh profits data affirmed it was a good quarter for the bottom line as well with profits up by the most since the Q2-2022.