Aussie dollar buoyed by risk-on start to the week
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Daily Currency Update
The Australian dollar enjoyed a steady upswing through trade on Monday, pushing off lows below US$0.66, amid broad US dollar weakness and a positive shift in risk sentiment. The AUD started the week on the back foot, edging below US$0.66 to mark intraday lows at US$0.6592 before a positive shift in sentiment helped fuel gains across risk assets.The AUD steadily climbed toward and through US$0.6650 recovering its recent upward bias. With US and UK markets closed in observance of public holidays, price action through overnight trade was largely muted. Investors simply chose to extend the risk-on run that started in the Asian session and the AUD opened this morning at US$0.6654.
Our attention now turns to domestic retail sales data for April. While consumer spending remains subdued, we expect some recovery from the March contraction. Offshore Japan PPI numbers, Eurozone CPI data, a US Consumer Confidence report and a slew of central bank speakers provide plenty of topline data points to digest and effect direction.
Key Movers
A risk-on mood enveloped markets through trade on Monday, starting at the open to Asian trade and continuing through the overnight session, forcing the USD lower against major counterparts. The Norwegian Kroner was the day's big winner up near 1% following a surge in oil prices. After suffering its biggest weekly decline in nearly a month, the oil price jumped more than 1% on Monday allowing the NOK to climb 0.8%, spurred on by a positive risk backdrop.The risk backdrop helped the antipodean currencies outperform while allowing markets to ignore dovish commentary from ECB officials and a downturn in European yields. The European Central Bank Chief Economist, Philip Lane, gave a clear and strong signal a rate cut is imminent, firming bets the ECB will cut rates when it meets next week.
Lane was clear policy should remain restrictive but pointed to the fact there is room to remove some restrictiveness and help boost domestic Eurozone activity. European yields fell as markets priced in 61 basis points of cuts into the end of the year. Despite the negative move in European yields, the euro edged higher against the USD as the risk-on mood and push away from haven assets helped prop up the single currency.
Our attention now turns to Japan PPI numbers Eurozone CPI expectations and US consumer confidence data amid a slew of central bank speakers.
Expected Ranges
- AUD/USD: 0.6580 - 0.6720 ▲
- AUD/EUR: 0.6080 - 0.6180 ▲
- GBP/AUD: 1.9100 - 1.9300 ▼
- AUD/NZD: 1.0780 - 1.0880 ▼
- AUD/CAD: 0.9000 - 0.9100 ▲