AUD marks fresh 2024 high against the Euro but fails again to break new ground against USD
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Daily Currency Update
In a largely lacklustre session, the AUD outperformed major counterparts, with little price action. The AUD sought to consolidate the post-RBA break above US$0.6650, extending toward intraday highs at US$0.6675 before tracking sideways and maintaining a narrow 10-point handle throughout the overnight session. With US markets closed in observance of a public holiday liquidity and volumes were thin. Investors appeared content in paring major bets ahead of a slew of key central bank and macroeconomic updates. The AUD remains well contained against the USD and continues to falter on moves approaching US$0.67. For the AUD to extend into a higher trading handle we need to see a shift in China's economic fortunes and/or a definitive end to US macroeconomic exceptionalism and a clear path to Fed rate cuts. While range bound against the USD, the AUD has broken through US$0.62 against the euro this week marking fresh year-to-date highs on the heels of French political uncertainty.Our attentions turn now to the Bank of England policy update, US jobless claims and Fed commentary for direction ahead of a slew of key PMI updates on Friday.
Key Movers
Price action across currency markets was well contained through trade on Wednesday as investors in the US observed a public holiday and markets appeared content in delaying big bets ahead of the Bank of England (BoE) policy update. UK headline inflation increased 2% year on year, in line with market expectations and the Bank of England’s target. Despite inflation finally converging with the Bank of England’s target after three years of price pain markets pared expectations for a rate cut following stubbornly sticky services inflation. Markets expect the BoE will unanimously vote to leave rates on hold today while a rate cut in August looks less likely. We expect September will be the first meeting where a rate cut is a real possibility. The GBP edged upward against most counterparts following the print, consolidating a break above 1.27. The euro is flat and stuck between 1.07 and 1.0750 while the Yen continues to try and defend moves above 158.Our focus now turns to the Bank of England policy meeting, US jobless claims, housing data and Fed commentary for direction through trade on Thursday.
Expected Ranges
- AUD/USD: 0.6580 - 0.6700 ▲
- AUD/EUR: 0.6130 - 0.6230 ▲
- GBP/AUD: 1.8900 - 1.9200 ▼
- AUD/NZD: 1.0780 - 1.0920 ▲
- AUD/CAD: 0.9100 - 0.9200 ▲