Aussie dollar continues to trade above US$0.66
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Daily Currency Update
The Australian dollar is slightly stronger this morning when valued against the Greenback currently trading at 0.6693 at the time of writing. The Aussie dollar rallied 0.5% versus the Greenback on Monday and opened Asian Tuesday’s session with renewed strength amid falling US yields. Expectations that the Federal Reserve would ease policy in 2024 were fueled by a weaker-than-expected US business activity report. After starting May in the doldrums below 0.6500, the AUD/USD pair ended up securing its first monthly close for the year above 0.6600 and its best monthly performance (+2.78%) in five months. The AUD/NZD echoed a bearish technical outlook on Monday, falling below key levels towards 1.0805 as markets await mid-tier data from both nations on a quiet economic schedule at the beginning of the week. Looking ahead on the data front today the Australian Bureau of Statistics will release the latest Current Account figures. It's directly linked to currency demand, a rising surplus indicates that foreigners are buying more of the domestic currency to execute transactions in the country. On Wednesday all eyes will be on the release of the quarterly Gross Domestic Product (GDP) which is expected to remain steady at 0.2%. It's the broadest measure of economic activity and the primary gauge of the economy's health. Finally, on Thursday we will see the release of the monthly Goods Trade Balance.Key Movers
In the US overnight business activity in the US manufacturing sector contracted at an accelerating pace in May, with the ISM Manufacturing PMI dropping to 48.7 from 49.2 in April. This reading came in below the market expectation of 49.6. The Employment Index of the PMI survey improved to 51.1 in May from 48.6 in April, while the New Orders Index slumped to 45.4 from 49.1. Finally, the Prices Paid Index, the inflation component, retreated to 57 from 60.9 in the same period. US Apr construction spending unexpectedly fell -0.1% m/m, weaker than expectations of +0.2% m/m. The markets are discounting the chances for a -25 bp rate cut at 1% for the June 11-12 FOMC meeting, 15% for the following meeting on July 30-31, and 51% for the meeting after that on Sep 17-18.In the Eurozone manufacturing PMI from Hamburg Commercial Bank (HCOB) grew to 47.3 in May, announced S&P Global on Monday. That was up from April's figure of 45.7 and just below the preliminary estimate of 47.4. The PMI figure looks at five indices to measure economic health: new orders, output, employment, suppliers' delivery times, and stocks of purchases. The Manufacturing PMI Output Index, a separate figure that makes up the broader Manufacturing PMI, looks at the production output of the sector. This jumped to a 14-month high of 49.3 in May - below the preliminary reading of 49.6 but an increase on April's 47.3.
Expected Ranges
- AUD/USD: 0.6600 - 0.6800 ▲
- AUD/EUR: 0.6000 - 0.6200 ▲
- GBP/AUD: 1.9050 - 1.9250 ▼
- AUD/NZD: 1.0700 - 1.0900 ▼
- AUD/CAD: 0.9000 - 0.9200 ▲