AUD slips below 0.73 as US consumers continue to spend

Daily Currency Update

The Australian dollar gave up 0.73 US cents on Thursday, touching 0.7275, its lowest level in over a fortnight. In what was a largely lacklustre domestic trading session, the AUD tracked between 0.7310 and 0.7340 before broad based US dollar gains forced the currency through supports overnight. Markets largely ignored August labour market data as an overture of risk concerns and stronger US dollar macroeconomic indicators spurred direction, as investors struggle to adjust expectations for global growth and US monetary policy. Fears China’s COVID crisis could worsen, derailing the recovery to date and prompting a collapse across key Chinese companies after Evergrande, a large property developer, moved one step closer to folding. China has previously built its way out of economic crisis and an impending disruption across construction and property development could drive a dramatic shift in demand for raw materials. The risk off tone generated in the wake of China concerns forced the AUD toward lows near 0.7310, before a robust US retail sales print drove the currency through 0.73. US consumers continue to spend despite the challenges of the pandemic and delta wave and perhaps eases some pressure on the FED to maintain its accommodative monetary policy program into the end of the year.