Aussie dollar trades below US$0.65
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Daily Currency Update
The Australian dollar is slightly weaker this morning when valued against the Greenback currently trading at 0.6496 at the time of writing. On the data front last week the Australian Bureau of Statistics (ABS) reported a trade surplus of 5,589 million for June, surpassing the anticipated 5,000 million but still below the previous reading of 5,773 million. On Wednesday the ABS reported that the Monthly Consumer Price Index (CPI) rose by 3.8% in the year to June, easing from the 4% posted in May. The quarterly CPI rose 1% QoQ and up 3.8% YoY in the second quarter of the year. The Reserve Bank of Australia (RBA) Trimmed Mean CPI, the central bank’s preferred gauge, rose by 3.9% YoY in Q2, against the expected and previous reading of 4.0%. Looking ahead this week and Investors are almost certain the RBA will keep the cash rate on hold at 4.35 per cent on Tuesday after figures last week showed underlying inflation continued to ease in the June quarter. While markets expect the RBA will cut interest rates by February 2025, a handful of analysts think the central bank could act as soon as November. If correct, the RBA board will leave rates at the existing 12-year high of 4.35 per cent, as it attempts to push inflation into its target range of 2 to 3 per cent – something it believes will be achieved by mid-2026.Key Movers
On Friday Nonfarm Payrolls (NFP) in the US rose 114,000 in July, the US Bureau of Labor Statistics (BLS) reported on Friday. This reading followed the 179,000 increase (revised from 206,000) recorded in June and fell short of the market expectation of 175,000. The US Unemployment Rate also ticked higher to 4.3%, the highest reading since November of 2021, while the U6 Underemployment Rate rose to 7.8% from 7.4% as employed people struggle to find jobs that provide enough hours. Average Hourly Earnings growth also eased to 0.2% MoM from the expected hold at 0.3%, with YoY wages growth cooling to 3.6% from the previous 3.8%. Stocks tumbled Friday after new government data showed a steep decline in hiring in July, spurring concerns that economic activity is slowing faster than economists expected. The blue-chip Dow Jones Industrial Average plunged more than 980 points, or 2.4%, in early trade before paring its losses to close down 611 points, or 1.5%, at 39,737. The broader S&P 500 sank 1.8% on the day, while the Nasdaq Composite slid 2.4%, fueled by disappointing quarterly earnings from bellwethers such as Amazon, Intel and Tesla. That dropped the tech-heavy index into "correction" territory, or when stocks slide at least 10% from their previous high.The GBP/USD pair recovers at a strong pace from an intraday low of 1.2707 above the round-level resistance of 1.2800 in Friday’s New York session. The Cable discovers strong buying interest on disappointing United States Nonfarm Payrolls (NFP) data for July. Last week the Bank of England cut interest rates for the first time since the start of the pandemic, providing some relief to households squeezed by the highest borrowing costs in 16 years. The decision takes the benchmark interest rate in the United Kingdom to five per cent from 5.25 per cent, where it had stood since September following the longest-running series of successive rate hikes in at least a century. The knife-edge decision saw five members of the Bank of England's monetary policy committee vote to reduce the rate, while four wanted to keep it on hold. The rate is still the highest it has been since April 2008.
Expected Ranges
- AUD/USD: 0.6400 - 0.6600 ▼
- AUD/EUR: 0.5850 - 0.6050 ▼
- GBP/AUD: 1.9450 - 1.9650 ▲
- AUD/NZD: 1.0800 - 1.1000 ▼
- AUD/CAD: 0.8900 - 0.9100 ▼