Aussie dollar continues to hold below 68 US cents

Daily Currency Update

The Australian dollar is slightly weaker this morning when valued against the Greenback. The AUD/USD jumped from around weekly lows below 0.6700 and climbed 0.44% on Friday. Factors like a risk-on impulse and an offered US Dollar (USD) keep the Australian Dollar (AUD) positive in the day. At the time of typing, the AUD/USD is trading at 0.6737. On the data front on Friday, the S&P Global Services PMI exceeded estimates, while the S&P Global Composite PMI was 50.6, higher than January’s 49.2, signaling the Australian economy is doing far better than expected. In China the Caixin Services PMI improved to 55, compared to 50.5 consensus, expanded at the fastest rhythm in six months in February as removing harsh COVID-19 restrictions revived customer demand, driving a solid increase in employment, a private sector survey showed on Friday.
Looking ahead this week and all eyes this week will be on the Reserve Bank of Australia (RBA) official cash rate announcement. The Reserve Bank is expected to lift the cash rate for the tenth consecutive time to a decade-high 3.6 per cent on Tuesday in a move that could be followed by at least two more this year if the bond market is right. In Australia, financial markets indicate a 96 per cent probability the RBA will raise the cash rate by one-quarter of a percentage point to a decade high of 3.6 per cent at its policy meeting on Tuesday. The terminal level of the cash rate is highly contested, with financial markets anticipating the peak rate at 4.2 per cent, which would mean at least three rate increases, including Tuesday’s expected move. The focus will be on the policy statement and whether the Reserve Bank’s key line that “further increases in interest rates will be needed over the months ahead” will be maintained.