AUD tests recent ranges following USD rebound

Daily Currency Update

AUD - Australian DollarThe Australian dollar drifted lower through trade on Wednesday, depressed by weakness across equities and a slew of stronger than anticipated US macroeconomic data sets. Having given up 0.78 US cents, the AUD remained largely range bound through the domestic session bouncing between 0.7740 and 0.7770 before marking fresh daily and weekly lows at 0.7725 following a massive upward surprise in US retail sales. Having disappointed in December, US consumers turned out in January marking a 5.1% uptick in spending; well above the 1% anticipated. The strong print was supported by gains in PPI inflation, industrial production and home sales which suggest the US economy is stronger than first anticipated. Having drifted back toward 0.7750 on open, our attentions now turn to domestic employment data. The monthly labour market report remains a crucial measure of recovery and a key marker for the RBA. Material improvements in job creation and a depreciation in unemployment would likely mean the RBA current QE program will not extend beyond September, while a poor print ahead of relaxed Jobseeker and JobKeeper benefits, next month may prompt calls for extend stimulus, weighing on the AUD. We anticipate an improvement and reduction to 6.4%.