AUD falters in face of stronger US data sets
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Daily Currency Update
The Australian dollar retracement continued through trade on Thursday following stronger than anticipated US PMI data. With little of note on the domestic docket the AUD tracked sideways through the local session, before finding support and rallying toward intraday day highs just north of US$0.6650. The upturn was however short lived with the AUD retracing gains and closing 0.2% lower on the day, having tested a break below US$0.66. Stronger than expected US PMI help arrest USD downside, lifting treasury yields and dampening demand for risk assets. After a string of softer US prints, the surprise uptick in activity erased some market participant calls for the Fed to bring forward rate hikes. Following a trend of higher highs and higher lows through the early part of May, the AUD has stumbled this week with investors baulking on moves approaching US$0.67. Attempts to break above this handle has been met with consistent selling pressure, resulting in a series of lower highs and lower lows for the AUD. The question now is whether this marks the beginning of a broader correction back toward a familiar range between US$0.64- 0.66, or if it's simply a short-term correction and consolidation following recent gains.Our attentions turn now to Japanese CPI data, UK retails sales, US durable goods orders and consumer sentiment, and commentary from Key Fed policy makers.
Key Movers
The USD closed the day having clawed back early losses following a stronger than anticipated US PMI print. The dollar was broadly weaker leading into the April print, but a better than expected read cooled fears the US economy is sliding toward recession. The US composite PMI index rose 3.1 points to its highest level since April 2022, well above expectations for a flat result. When coupled with a smaller than expected jobless claims print, US treasury yields jumped through the back half of the overnight session dragging the USD higher across the board. The USD continued to test the resolve of the Bank of Japan and Ministry of Finance, pushing above 157 for the first time since officials intervened earlier this month. While up against the yen, the dollar is flat against the euro after Eurozone PMI’s ticked higher, led by gains in manufacturing. A higher than expected read helped fuel rising expectations for a broader global manufacturing recovery. Euro Area wages also rose at a faster pace than expected, yet gains were offset by an ECB report wherein it expects wage pressures will decelerate through the back half of 2024. All in pricing for an ECB rate cut in June was little changed.Our attentions turn now to Japan CPI data, UK and Canadian retails sales, and US consumer sentiment and Goods orders.
Expected Ranges
- AUD/USD: 0.6550 - 0.6650 ▼
- AUD/EUR: 0.6050 - 0.6150 ▼
- GBP/AUD: 1.9050 - 1.9350 ▲
- AUD/NZD: 1.0780 - 1.0920 ▼
- AUD/CAD: 0.9000 - 0.9100 ▲