AUD recovery continues as sentiment improves

Daily Currency Update

The Australian dollar recovery continued through trade on Wednesday, stretching comfortably through 0.7150 to mark intraday highs at 0.7180. Market sentiment continues to improve as investors adopt a more optimistic outlook on China, while the threat posed by the omicron variant appears to be fading. Having tracked sideways for much of the domestic session, the AUD was well-supported overnight, bolstered by Chinese yuan surge. The CNY forced the USD down toward 6.34, marking a 3-year high amid hopes accommodative monetary policy conditions and a reduction in controls on the property market will promote a strong post- Delta rebound throughout 2022. The elevated yuan coupled with another surge in key commodity prices, namely Iron Ore, helped drag the AUD higher, extending the week's upturn and consolidating the break away from supports at 0.70 US cents.

Our attentions today turn to RBA Governor Lowe as he addresses a virtual summit on Australian Payment Networks. We expect very little update on the commentary afforded in the wake of RBA policy update. Chinese CPI and PPI data and US jobless claims dominate the international macroeconomic ticket while market sentiment continues to steer the broader narrative.