AUD – Australian Dollar
The Australian dollar maintained a narrow trading band through trade on Monday, unable to break resistance at 0.7790/0.78 US cents. Limited news flow and an absence of headline data meant moves across currency markets were largely muted as markets essentially tread water, weighing near term pandemic lead uncertainty and soft data against longer term recovery expectations. The AUD bounced between 0.776 and 0.7790 for much of the day as investors sold into rallies approaching 0.78, reluctant to extend beyond this key resistance handle. We expect the AUD will remain range bound in the absence of a clear catalyst driving risk on gains. Commodity prices remain supportive however Thursday’s labour market report could prove pivotal in shaping medium term direction and RBA expectations. The RBA has highlighted the performance of the domestic economy in shaping policy decisions. With unemployment uncomfortably high already and asset price bubbles not yet evident a poor performance could raise expectations the RBA will extend its QE program beyond September, weighing on the AUD.
The Great British Pound outperformed again on Monday, pushing through 1.39 for the first time in nearly 24 months as market focus moves from the long-held pressures of Brexit to expectations for economic recovery. The UK is leading the charge in vaccinating its citizenry with more than 15 million Britons receiving at least their first dose of COVID-19 vaccine. This expedited push has raised hopes the UK will be in a position to avoid further national lockdowns and re-open its domestic economy as early as summer May/June.
The USD remains under pressure drifting lower across the board, while the JPY was the weakest of major currencies. An increase in global rates has forced the JPY lower against the USD with the dollar extending back above 105 to 105.30.
With little of note on today’s’ macroeconomic ticket we expect direction and ranges will remain narrow leading into Wednesday Core Retail Sales print and Friday’s Manufacturing and Services PMI data dump.
AUD/USD: 0.7630 – 0.7820 ▲
AUD/EUR: 0.6320 – 0.6430 ▲
GBP/AUD: 1.7780 – 1.8020 ▲
AUD/NZD: 1.0690 – 1.0780 ▲
AUD/CAD: 0.9780 – 0.9860 ▼