Aussie dollar bounces back in session lacking clear narrative

Daily Currency Update

AUD - Australian Dollar

The Australian dollar rebounded through trade on Thursday, pushing back above 0.72 US cents in what was a session absent of any key narrative. There was plenty of headline news flow to drive direction, yet investors seemed uncertain what theme would win out. Equities remain under pressure as a series of roadblocks to recovery dampen demand for risk assets, in particular surging energy prices. Supply disruptions have driven the price of key commodities sharply higher with coal, natural gas and oil all advancing through September. Fears higher prices will leave central banks with no choice but to tighten monetary policy ahead of schedule have fostered concerns the global recovery will face further headwinds. A slower recovery is bad news for the AUD, and risk assets and investors looked to the Japanese yen as a haven play. The risk off tone was however countered by positive news from China. Reports state-owned energy companies are being directed to secure enough supply to ensure consistent delivery through the winter, coupled with reports authorities will step in to protect those most vulnerable should Evergrande default, while suring up the rest of the sector to avoid contagion, helped bolster hopes any major fallout will be contained. Having touched intraday lows at 0.7170, the AUD pushed back above 0.7250 before settling into a narrow handle leading into this morning’s open.

Our attentions turn to a host of inflation indicators, while a vote in Congress for the democrats 1.2 trillion-dollar infrastructure bill could help offer some insight as to whether the debt ceiling will be lifted in the immediate near-term. Evidently markets are still struggling to find conviction in direction meaning ongoing volatility within recent ranges is likely to continue through the near-term.

*Please note there will be no Daily Commentary on Monday 4th of October due to the labour day public holiday in most states.