Aussie dollar trades back above US$0.67
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Daily Currency Update
The Australian dollar is stronger this morning when valued against the Greenback currently trading at 0.6778 at time of writing. This upward move comes as the US dollar weakens following Federal Reserve (Fed) Chair Jerome Powell's speech at the Jackson Hole symposium. The Australian dollar is bolstered by last week's Reserve Bank of Australia (RBA) meeting minutes, which reveal a reluctance to ease monetary policy soon. The RBA projects inflation to stay above the 2-3% target until the end of 2025, suggesting interest rates may remain elevated for an extended period. Governor Bullock has recently stated that the bank has no plans of cutting in the near term. Resistance levels to watch include 0.6800 and 0.6850, while support levels are at 0.6700 and 0.6650. Looking ahead this week on the data front and on Wednesday the Australian Bureau of Statistics will release the latest Consumer Price Index (CPI) figures. Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate. On Thursday we will see the release of the quarterly Private Capital Expenditure which is a leading indicator of economic health. Businesses are quickly affected by market conditions, and changes in their investment levels can be an early signal of future economic activity such as hiring, spending, and earnings. Finally, on Friday we will see the release of monthly Retail Sales figures the primary gauge of consumer spending, which accounts for the majority of overall economic activity.Key Movers
The head of the US central bank has said "the time has come" for officials to cut interest rates, but he offered few clues as to how quickly or how far borrowing costs might come down. The speech from Federal Reserve chairman Jerome Powell was being closely watched, as rising unemployment has revived concerns about how the US economy is holding up under higher interest rates. Mr Powell said the bank was increasingly focused on the job market, as it gains confidence that the US was moving past the surging prices that started during the pandemic. Inflation, which tracks the pace of price rises, fell to 2.9% in the US last month, its lowest rate since March 2021. Traders have shifted their bets slightly towards a 0.5 percentage point cut on 18 September, but the consensus is still for a 0.25 percentage point cut. In the US, the Fed has kept its key lending rate at roughly 5.3%, a two-decade high since last July, holding off on cuts pursued by central banks in other countries, including the UK. U.S. stocks rallied closer to their records on Friday after the Federal Reserve announcement with the S&P 500 rallying 63.97 points, or 1.1%, to 5,634.61. The index is back within 0.6% of its all-time high set last month. The Dow Jones Industrial Average climbed 1.1%, and the Nasdaq composite added 1.5%. Treasury yields fell in the bond market. The Dow Jones Industrial Average rose 462.30 points, or 1.1% to 41,175.08.Expected Ranges
- AUD/USD: 0.6700 - 0.6900 ▲
- AUD/EUR: 0.5950 - 0.6150 ▲
- GBP/AUD: 1.9300 - 1.9500 ▲
- AUD/NZD: 1.0750 - 1.0950 ▼
- AUD/CAD: 0.9050 - 0.9250 ▲