Home Daily Commentaries AUD maintains narrow range as investors consolidate following a sharp correction in expectations

AUD maintains narrow range as investors consolidate following a sharp correction in expectations

Thursday 9 February, 2023

Daily Currency Update

The Australian dollar failed to hold on to gains won through the domestic session, sliding back toward US$0.6920 as risk sentiment faded overnight. Having opened at US$0.6950 the AUD tracked toward intraday highs just shy of US$0.70 basking in the afterglow that followed the RBA’s hawkish policy update. Having touched US$0.6990 the AUD then fell steadily overnight as risk sentiment shifted amid more hawkish commentary from key central bank officials. In the wake of Fed Chair Jerome Powell’s address another wave of Fed speakers affirmed the FOMC’s commitment to a higher peak funds rate. The promise of higher rates has put downward pressure on global equities, dampening demand for risk and capping AUD gains.

With little of note on today’s macroeconomic ticket our attentions remain with Fed speak and shifting policy expectations. We anticipate the AUD will continue to find support on moves toward US$0.6870 while resistance approaching US$0.70 should hold.

Key Movers

There has been little movement across major currencies through trade on Wednesday as markets appear content in digesting a blockbuster week of headline data shocks and key central bank policy updates. The USD showed little net change across key indices while the Euro maintains a narrow 50 point handle and the GBP failed to extend a break beyond 1.21. Risk sentiment faded through the day as global rates climbed. Against this backdrop of higher rates the USD clawed its way toward 131.50 against the JPY yet offered little meaningful sign it would extend the advance.

With little of note on today’s calendar direction will continue to be dictated by shifting global rate expectations. After last week’s sharp price corrections we anticipate a period of consolidation as markets reassess positions.

Expected Ranges

  • AUD/USD: 0.6880 - 0.7020 ▲
  • AUD/EUR: 0.6420 - 0.6520 ▼
  • GBP/AUD: 1.7280 - 1.7520 ▲
  • AUD/NZD: 1.0950 - 1.1050 ▼
  • AUD/CAD: 0.9280 - 0.9350 ▼