Languid AUD fails to mount upside push as attentions turn to labour market data

AUD - Australian Dollar

The AUD struggled to mount any upward momentum through trade on Wednesday as moves across antipodean currencies remained largely muted. Despite an uptick in broader risk sentiment following fears the Coronavirus will spread and morph into a SARS like global epidemic abated the AUD failed to lift off recent lows and extend meaningfully beyond 0.6850. Investors appeared reluctant to extend moves prior to today’s employment change and unemployment rate prints as labour market data remains crucial in governing RBA policy. A strong read will stave off calls for additional RBA monetary policy adjustments and afford policy setters time and ammunition to combat any future slowdowns in growth. With strong supports still in place on moves approaching 0.6830/0.68 and October 2019 lows we expect the AUD to maintain short term ranges with a view to possible upside in the latter half of 2020.

Key Movers

The US dollar index edged downward through trade on Wednesday, following the Yen and Swiss franc lower amid easing demand for safe haven assets. Early week concerns the Coronavirus would spread beyond China and develop into a SARS like epidemic abated Wednesday as Chinese health officials proffer greater transparency into the viruses management and its path to limiting the global fallout.

The Canadian Dollar slipped in the wake of the Bank of Canada’s monthly monetary policy meeting. While policy setter’s opted to leave rates on hold at 1.75% there was suggestion a rate cut would be appropriate should the recent slowdown on growth continue.

The Great British Pound advanced through trade on Wednesday following a stronger than expected uptick in manufacturer’s sentiment, dampening calls for a Bank of England rate cut next week. Expectations for a policy shift have abated through the week thus far with futures pricing in a 50% chance of a rate cut on January 30, down from 70% on Monday. Advancing to one month highs against the Euro and two week highs against the USD our attentions now turn to Friday’s PMI print, a key indicator which could sway the interest rate debate.

Expected Ranges

AUD/USD: 0.6790 - 0.6890 ▼

AUD/EUR: 0.6150 - 0.6250 ▼

GBP/AUD: 1.8920 - 1.9410 ▲

AUD/NZD: 1.0330 - 1.0450 ▼

AUD/CAD: 0.8930 - 0.9080 ▲