AUD/USD trades below 67 US cents

Daily currency update

The Australian dollar is weaker this morning when valued against the Greenback and closed the week at 0.6645. The Aussie dollar attracted fresh sellers on Friday extending the previous day’s slide from over a two-week peak around the 0.6755-0.6760 region, which coincides with a technically significant 200-day Simple Moving Average (SMA). The intraday downfall drags spot prices to over a one-week low, around the 0.6645 area during the first half of the European session by resurgent US Dollar (USD) demand. Risk sentiment remains fragile over lingering and spillover concerns to European banks. We had earlier cautioned that contagion/worries going outside of the US could see risk proxies under pressure. Next support at 0.6620, 0.6560 levels. Resistance at 0.6680 and 0.6760. Looking ahead this week and on Tuesday the Australian Bureau of Statistics will release the monthly retail sales figures. This is the earliest look at vital consumer spending data and the primary gauge of consumer spending, which accounts for the majority of overall economic activity. On Wednesday we will see the release of the Consumer Price Index (CPI). Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate. Finally, on Friday the Reserve Bank of Australia will release the monthly Private Sector Credit. Borrowing and spending are positively correlated as consumers and businesses tend to seek credit when they are confident in their future financial position and feel comfortable spending money.

Key movers

Deutsche Bank (DB) came under significant selling pressure on Friday night, with hedge funds seeing that bank as the next possible European banking casualty. The stock price was down almost 15% early in the trading session, which prompted a flurry of comments. Although this harmed Wall Street at the beginning of the session, investors appeared to dismiss these fears and instead speculated that the Federal Reserve (Fed) would lower interest rates in 2023. Federal Reserve officials crossed wires in the session. St. Louis Fed President James Bullard noted that rates need to get to the 5.50%-5.75% range, which would require an additional 75 bps of rate hikes after the Fed’s raised rates to the 4.75%-5.00%. On the data front, the US economic calendar featured the S&P Global PMI improved in March, exceeding expectations and the prior’s month data. The Manufacturing Index stood in the contractionary territory. At the same time, Durable Good Orders plunged by 1% but improved compared to the last month’s reading. In the week ahead, we’ll hear more from Fed speakers following the FOMC meeting last week. The president of the Federal Reserve Bank of Minneapolis Neel Kashkari reinforced on Sunday that the banking system is “sound.” Kashkari’s comments come after weeks of turmoil in the banking industry, as Signature Bank and Silicon Valley Bank collapsed earlier this month and First Republic Bank needed to be bailed out by a group of other banks. These incidents have sparked market concerns about whether a larger banking crisis is imminent.

Expected ranges

• AUD/USD: 0.6550 – 0.6750 ▼
• AUD/EUR: 0.6050 – 0.6250 ▼
• GBP/AUD: 1.8250 – 1.8450 ▲
• AUD/NZD: 1.0550 – 1.0750 ▼
• AUD/CAD: 0.9000 – 0.9200 ▼