Home Daily Commentaries Markets quiet as attentions turn to US inflation and presidential debate

Markets quiet as attentions turn to US inflation and presidential debate

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Tuesday 10 September, 2024

Daily Currency Update

The Australian dollar gave up two-tenths of a per cent through trade on Monday amid a broadly stronger US dollar. An absence of major data allowed investors to consolidate positions ahead of key US CPI inflation data and the first Harris/Trump presidential debate. The AUD slipped to touch US$0.6666 yet outperformed against key crosses, up against the NZD, GBP and euro, perhaps in response to last week's broad underperformance.

Having tested a break above US$0.68 a little over a week ago the AUD has since struggled to maintain upward momentum and China inflation data Monday did little to help underpin the currency. PPI numbers remain anaemic while CPI inflation pressures fell to a three-year low, highlighting the overcapacity struggles facing Chinese policymakers amid a distinct lack of consumer demand.

Our attentions turn now to UK labour market data ahead of US CPI numbers on Wednesday, while the Trump/Harris presidential debate Tuesday in the US will prove key in shaping election expectations. If Trump proffers a strong performance it could support near term USD gains, while a Harris win will likely ensure focus remains affixed to the Fed and rate cut expectations.

Key Movers

The US dollar outperformed the majority of majors through Monday in what was a relatively quiet start to the week. An absence of headline news flow allowed investors to sideline major bets and direct attentions to US CPI inflation and PPI data due later this week. While the Fed has made it clear its focus has shifted to protecting the labour market, analysts will still want to see inflation tracking lower.

A surprise uptick in price pressures may disrupt calls for the Fed to cut rates by 50-basis points next week, while another soft print gives policymakers licence to adopt a faster pace of normalisation. The DXY index is higher as the pound slipped below 1.31 and the euro gave up 1.1050, while the yen tested 144. The Canadian dollar was the day's only winner, albeit gains were modest.

Our attentions turn now to UK labour market data as the only headline item on the agenda today. While employment growth will be important, our focus will be affixed to wage data as a key marker for the Bank of England. Resilience within the labour market gives the BoE license to leave rates on hold this month, with the first likely rate cut to come in November.

Expected Ranges

  • AUD/USD: 0.6620 - 0.6780 ▼
  • AUD/EUR: 0.5980 - 0.6100 ▲
  • GBP/AUD: 1.9500 - 1.9700 ▼
  • AUD/NZD: 1.0800 - 1.0900 ▲
  • AUD/CAD: 0.9000 - 0.9100 ▼

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.