AUD – Australian Dollar
A buoyant US Dollar saw the Australian Dollar trade lower on Friday as stronger than expected US economic data boosted USD sentiment, and stoked inflationary fears. Hawkish commentary from the Fed also aided the US Dollar which saw the index rise 0.7% on the day. The Australian Dollar and the Kiwi Dollar both suffered; AUD/USD fell from 0.7780 to 0.7696 whilst the NZD/USD fell from 0.7240 to 0.7151. Given the NZD was the session’s worst performer, the AUD/NZD cross rate managed to climb from 1.0730 to 1.0775.
We’re set for a busy Monday today for the Australian Dollar. We have the April release of the CoreLogic home value index which is expected to show another strong monthly read with the national index expected to rise 1.8%. The MI inflation gauge, which is also released today, should provide investors with some insight into the trajectory of domestic inflation after the soft Q1 CPI print. We will also get ANZ job ads for April which have been strong of late.
Having briefly breached downside supports at 0.7700 on Friday and with only minimal evidence of further downside support, traders will be fearful that further AUD weakness could see a retreat back to the 0.7600 handle from early April.
A rebounding US economy is the main story being absorbed into financial market pricing at present. The world’s largest economy continues to perform better than the market predicts and a raft of strong releases on Friday supported this theme. Consumer sentiment rose further in April, the Q1 employment cost index had its largest rise since 2007, measures of personal income were also higher and Chicago business activity indexes approached 40-year highs.
There was also some commentary from Fed Hawk Kaplan (non-voter) that the Fed should begin discussions around tapering and stated his preference for a rate hike in 2022.
The USD was higher across the board as the Australian and New Zealand Dollar underperformed. The EUR fell from 1.2115 to 1.2017 despite Q1 GDP coming in better than expected (still a -1.8% contraction on the yearly read).
AUD/USD: 0.7680 – 0.7760 ▼
GBP/AUD: 1.7750 – 1.8000 ▼
AUD/NZD: 1.0700 – 1.0800 ▲
AUD/EUR: 0.6390 0 0.6440 ▼
AUD/CAD: 0.9450 – 0.9540 ▼