Home Daily Commentaries AUD decline extends into its ninth consecutive day

AUD decline extends into its ninth consecutive day

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Friday 26 July, 2024

Daily Currency Update

Another tough day for the Australian dollar, driven lower by a souring China outlook and stronger than anticipated US macroeconomic data. Market expectations for China’s growth outlook cooled further through trade on Thursday, extending losses across local and regional equity markets and commodity prices. Bloomberg’s industrial metals index has fallen 9% over the last nine days and is down near 20% since hitting a 2024 peak in May. The move has heightened risk aversion, exacerbating AUD declines. With the US GDP data surprising to the upside overnight, the AUD slumped to intraday lows at US$0.6515, before finding support. It has been a remarkable reversal these last two weeks after kissing US$0.68 on July 10, the AUD has marked lower lows through the last nine trading days. The question now, has the move been overdone? The AUD did find support, bouncing back toward US$0.6540 into this morning’s open, yet whether this constitutes the beginnings of a broader recovery remains to be seen. We are keenly watching direction and sentiment through Friday in preparing expectations for AUD performance next week.

Key Movers

There is plenty to digest this morning as markets absorb a stronger than expected US GDP data print. Real GDP growth accelerated 2.8% in the 2nd quarter, well up on Q1 and streaks ahead of consensus estimates. Details showed consumer spending remains a key driver, while business investment remains strong. The robust print shows a US economy that is coping remarkably well with tighter monetary policy conditions and suggests there is little urgency for the Fed to start its easing cycle until inflation is back to target. Markets have all but priced out any chance of a rate cut next week and are instead focused on tonight’s PCE deflator index as a key marker for inflation.

The Swiss Franc was the days outperformer, buoyed by the broader risk off narrative, while the yen tracked sideways and the euro proved resilient.

Our attentions turn now to Japan’s Tokyo CPI inflation report and US inflation data as key markers for direction into the weekly close.

Expected Ranges

  • AUD/USD: 0.6480 - 0.6600 ▼
  • AUD/EUR: 0.5980 - 0.6050 ▼
  • GBP/AUD: 1.9500 - 1.9800 ▲
  • AUD/NZD: 1.1030 - 1.1150 ▲
  • AUD/CAD: 0.9000 - 0.9100 ▼

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.

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