Price Action Levels Out After Last Week’s Roller Coaster
Daily Currency Update
The Australian dollar edged higher in trading on Monday as part of a broader improvement in risk appetite. With little headline news and largely calm macro markets, markets turned to risk assets, propelling major equity indices higher and supporting commodity currencies. After opening at 0.6930, the AUD made intraday highs at 0.6990 before falling at this morning’s open. Following last week’s turbulent activity, the AUD remains vulnerable to further bearish moves and shifts in the broader risk discourse. Global headwinds remain in play and a break below the supports at 0.6930 could trigger another move lower since the start of the year. Our attention today turns to the minutes of the RBA policy meeting. With the RBA expected to issue another 50bp hike in July, any signal within the minutes that points to a more aggressive path towards monetary policy normalization could add some support to the AUD and incite further movement. above 0.70 while any note of caution could incite further downside.
Price action in major currencies was muted by trading on Monday, as US markets enjoyed a bank holiday on Monday and investors began to recover from last week’s spike in volatility. A flurry of comments from key central bank figures offered little new information on future monetary policy shifts, with speakers reiterating what markets had already expected. St. Louis Fed Chairman Bullard maintained a hawkish assessment of US economic activity and suggested the Fed must meet market expectations if it is to bring inflation under control. ECB President Christine Lagarde affirmed banks’ commitment to raising rates in July and outlined the case for moving away from negative rates, while the Bank of England and MPC member, Mann, suggested that the BoE should be more aggressive in its approach to monetary policy if it is to control inflation and avoid a sharp devaluation of the GBP. The Euro, British Pound and Yen showed little net movement and are all down against the commodity-led crosses. This week, our focus remains on the risk narrative and central bank comments. Inflation data from Canada and a slew of manufacturing and services data from Europe and the US dominate the macroeconomic note.
- AUD/USD: 0.6880 – 0.7020 ▲
- AUD/EUR: 0.6580 – 0.6680 ▲
- GBP/AUD: 1.7480 – 1.7720 ▼
- AUD/NZD: 1.0960 – 1.1020 ▼
- AUD/CAD: 0.8990 – 0.9090 ▲