Aussie resilient and commodity prices underpin uptick

Daily Currency Update

AUD - Australian Dollar

The Australian dollar edged higher through trade on Wednesday, taking advantage of a broader USD correction and rising commodity prices. Having tracked sideways through the domestic session, bouncing between 0.7330 and 0.7350 the AUD extended toward intraday highs at 0.7380 overnight. With the US dollar poised to test new highs, the AUD has proved remarkably resilient. Optimism surrounding the domestic COVID-19 outlook, with NSW and the ACT beginning to lift restrictions and Victoria set to move by month-end have helped buoy hopes the economy will enjoy a swift and rapid rebound into Christmas. A stronger domestic outlook coupled with fast-rising coal prices and a rebound in iron and copper has underpinned recent gains, opening the door for a push toward and possibly through 0.74 US cents. Sustained strength across commodity prices and an improving global COVID-19 outlook are crucial for near term AUD upside. With the USD gathering momentum leading into next month's Fed policy update as stagflation, inflationary pressures and improving yield plays help drive demand.

Our attentions today turn to domestic labour market data. With most of the east coast under lockdown for September, we don’t expect a great deal from this month’s print. Further job losses and an uptick in the unemployment rate are to be expected.