Home Daily Commentaries Aussie dollar falls below US$0.67

Aussie dollar falls below US$0.67

Brett Ottawa
Written by
Brett Ottawa

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market.

| Monday 22 July, 2024

Daily Currency Update

The Australian dollar is slightly weaker this morning when valued against the Greenback, currently trading at 0.6670 at time of writing. The Australian dollar saw considerable losses against the Greenback on Friday, falling below 0.6700. This slump in the AUD/USD exchange rate is mostly due to the strengthening of the US dollar amid increased aversion to risk. Commodity prices are affecting the Aussie dollar with Iron ore prices plunging 1.70%, extending their losses for the last two weeks to more than 3.70%. On the data front, last week the seasonally adjusted unemployment rate in Australia increased by less than 0.1 percentage point to 4.1% in June, fresh figures from ABS showed. With employment rising by around 50,000 people and the number of unemployed growing by 10,000 people, the unemployment rate rose slightly to 4.1%, and the participation rate rose to 66.9%. The participation rate in June was 66.9%, just 0.1 percentage point below the historical high of 67% in November 2023. Looking ahead this week and on Wednesday we will see the Flash manufacturers Purchasing Managers' Index (PMI). It's a leading indicator of economic health because businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy. All eyes will be on next Wednesday's Consumer Price Index (CPI). 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.

Key Movers

US President Joe Biden has ended his bid for re-election, opening the way for another Democratic candidate to take on Republican Donald Trump in November’s election. On Sunday afternoon (US time), Mr Biden declared it was in the “best interest” of the Democratic Party and the country for him to drop out of the 2024 US presidential race. He also endorsed Vice President Kamala Harris to replace him on the ballot. The Democratic National Convention, where delegates will formally select the nominee, is scheduled to take place in Chicago in mid-August. Mr Biden will remain President until the end of his term next January.

On the data front last week, the US reported that Retail Sales remained pretty much unchanged in June, as expected, although the core reading, Retail Sales ex Autos, rose 0.4%, better than the previous 0.1%. Looking ahead to this week, the country will release the first estimate of the Q2 Gross Domestic Product (GDP) and the June Personal Consumption Expenditures (PCE) Price Index, the Fed's favourite inflation gauge. The PCE index stood at 2.5% YoY in May, and any reading below such a level should fuel hopes for a September cut. The US Dollar Index, which tracks the currency's performance against six other currencies, is up 0.18% at 104.34. US Treasury bond yields are also rising across the yield curve, with the 10-year Treasury note yielding 4.233%, up more than three basis points (bps).

Expected Ranges

  • AUD/USD: 0.6600 - 0.6800 ▼
  • AUD/EUR: 0.6000 - 0.6200 ▼
  • GBP/AUD: 1.9150 - 1.9350 ▲
  • AUD/NZD: 1.1000 - 1.1200 ▲
  • AUD/CAD: 0.9050 - 0.9250 ▲

Written by

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market. He started his foreign exchange career with OFX more than a decade ago, as a private dealer catering to individual clients. He later transitioned to the corporate sector, assuming the position of Corporate Senior Relationship Manager. What truly excites Brett is the opportunity to engage with people, supporting their business growth and sharing in their successes.