Aussie dollar falls below 67 US cents

Daily Currency Update

The Australian dollar finished the week trading below 67 US cents on modest USD strength. On Friday the AUD/USD pair reached a year-to-date (YTD) low at 0.6670, accumulating weekly losses of more than 2%, spurred by investors positioning ahead of further Federal Reserve aggressive tightening, underpinning the greenback. The Reserve Bank of Australia (RBA) Governor Philip Lowe said that the bank is committed to returning inflation to the 2-3% bank target over time but trying to achieve it, without damaging the economy. Furthermore, Lowe added that at some point, the RBA would hike in 25 bps increments, adding that they’re getting closer to that point, even opening the door for discussions of 25 or 50 bps in the next meeting. Overall sentiment has been bearish in the markets, hitting US stocks and commodities, but also weakening commodity-linked currencies such as the AUD or NZD.

On the data front this week on Tuesday the Reserve Bank of Australia (RBA) will release the Monetary Policy Meeting Minutes which will provide a detailed record of the RBA Reserve Bank Board's most recent meeting, providing in-depth insights into the economic conditions that influenced their decision on where to set interest rates. On Wednesday the Melbourne Institute will release the monthly MI Leading Index which looks at 9 economic indicators related to consumer confidence, housing, stock market prices, unemployment expectations, hours worked, commodity prices, and interest rate spreads. On Friday we will see the release of the Manufacturing Purchasing Managers' Index (PMI) a survey of about 400 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.