AUD upturn falters as risk aversion elevated
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Daily Currency Update
The Australian Dollars assault on US$0.67 faltered through trade on Tuesday as the AUD underperformed amid elevated risk aversion and a correction in key commodity prices. Having touched highs at US$0.6699 in the early part of the domestic session the AUD then retreated as market sentiment shifted and demand for haven assets lifted. Reports China's inventories increased forced a 3% correction in Copper and a 2% correction in Iron Ore prices amid ongoing concern surrounding China’s economic recovery. The drag on commodities flowed into AUD value and emerging market risk aversion triggered by a surprise election result in India pushed investors toward the USD, JPY and CHF. The AUD fell nearly half a per cent on the day and now trades below US$0.6650, buying US$0.6649 at the time of writing.Key Movers
The US dollar is broadly stronger this morning elevated by heightened risk aversion and a decline in commodity prices. The USD advanced against most majors except the JPY and CHF as market demand for haven assets surged following a surprise election result in India and ongoing China economic concerns. The DXY index climbed despite a further decline in US treasury yields following a softer than expected JOLTS jobs report. Job openings fell to their lowest level in 3 years elevating calls for the Fed to cut rates amid an underperforming labour market. The likelihood of a September rate cut now sits at 75% up 5% on yesterday. With the US treasury yields on the back foot, the Japanese yen was the day's best performer. Buoyed by the decline in US rates the JPY found added support following reports the Bank of Japan will likely reduce bond purchases at its next policy meeting.Our attention now turns to a stacked macro docket led by EU, US and UK PMI data, US services ISM data, China Caixin manufacturing PMI and a Bank of Canada policy meeting.
Expected Ranges
- AUD/USD: 0.6600 - 0.6700 ▼
- AUD/EUR: 0.6080 - 0.6150 ▼
- GBP/AUD: 1.9050 - 1.9350 ▲
- AUD/NZD: 1.0720 - 1.0820 ▼
- AUD/CAD: 0.9020 - 0.9120 ▼