AUD continues to underperform as commodity prices slide
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Daily Currency Update
It was a relatively uneventful Tuesday with no major headline newsflow and limited key macroeconomic items on the agenda, yet the AUD sell-off continued. Lower commodity prices continue to weigh on the currency with Bloomberg’s industrial metal index closing another 1% lower marking a 7th consecutive daily decline. Iron ore prices tumbled below 100 USD for the first time since April, while oil prices and copper tracked lower as well. The AUD retracement extended to an intraday low at US$0.6612 before supports kicked in, marking a 1.75% decline in the last 7 days. With other majors tracking within narrower trading handles the AUD has underperformed across the board sliding below €0.61 against the euro and £0.5150 the pound, while JPY outperformance has seen the AUD tumble off highs approaching ¥107 back below ¥103.90.Our attention now turns to a slew of European, UK and US PMI data sets and the Bank of Canada policy meeting on Wednesday for direction through trade.
Key Movers
With little headline newsflow to drive direction and a light macroeconomic calendar, most majors tracked within a narrow range on Tuesday. US equities were flat and treasury yields edged lower, while the euro and GBP offered little to excite investors. The JPY however outperformed for a 2nd consecutive day as markets managed short positions ahead of next week’s Bank of Japan policy meeting. Analysis suggests there is a 50/50 chance of a token 10 basis point rate hike with calls growing for a more meaningful adjustment in the face of rising inflation. The USD gave up 1% and now trades at ¥155.57.Our attention now turns to UK, eurozone, and US manufacturing and Services PMI data, while commentary from European Central Bank speakers and the Bank of Canada policy meeting round out the ticket.
Expected Ranges
- AUD/USD: 0.6580 - 0.6700 ▼
- AUD/EUR: 0.6050 - 0.6130 ▼
- GBP/AUD: 1.9400 - 1.9700 ▲
- AUD/NZD: 1.01050 - 1.1150 ▼
- AUD/CAD: 0.9050 - 0.9150 ▼