- The Australian dollar remains under pressures against the greenback, falling to its lowest level since December 2017.
- Higher US bond yields continue to support the greenback.
- Australia’s March quarter CPI report will be released today.
The Australian dollar is getting beaten up, falling heavily again on Monday as US bond yields continued to lift.
Here’s the scoreboard as at 7am AEST.
AUD/USD 0.7604 , -0.0068 , -0.89%
AUD/JPY 82.65 , 0.14 , 0.17%
AUD/CNH 4.7971 , -0.015 , -0.31%
AUD/EUR 0.6228 , -0.001 , -0.16%
AUD/GBP 0.5454 , -0.0016 , -0.29%
AUD/NZD 1.0635 , 0.0017 , 0.16%
AUD/CAD 0.9771 , -0.0012 , -0.12%
And here’s the AUD/USD hourly chart, revealing just how far and fast the Aussie has tumbled over the past three trading sessions.
It’s now shed 2.7% from Thursday’s high of .7812, leaving it sitting at the lowest level since December 13 last year.
As has been the case over the past few days, the move on Monday was more about US dollar strength, rather than Australian dollar weakness, said David de Garis, economist at the National Australia Bank.
“[Monday’s session] has been marked by further strength in the US dollar, further rises in US Treasury and global bond yields, and commodity price volatility,” he said in his morning note.
“The US dollar index (DXY) is up 0.69% and the spot Bloomberg dollar index up 0.84%. In the wash up, the AUD has made a new low for the year, reaching 0.76 in late New York trade.”
De Garis said the US dollar’s rise is being propelled by higher US bond yields, driven by increased speculation that US inflationary pressures are continuing to build.
Benchmark 10-year government yields hit an intrasession high of 2.996% on Monday, the highest level seen in four years.
Whether the down-draft in the Aussie dollar continues today will likely be determined by the release of Australia’s March quarter consumer price inflation report (CPI) at 11.30am AEST.
Headline CPI is expected to increase by 0.5% over the quarter, seeing the annual rate lift to 2% from 1.9%.
Underlying CPI — of more importance when it comes to the outlook for interest rate settings — is tipped to increase by 0.5%, leaving the change on a year earlier at 1.85%.
This 10-second guide has more on what to look out for in the report.
“All eyes will be on CPI, but it’s hard to see inflation breaking high enough to lift the AUD,” says Giulia Specchia, FX strategist at ANZ Bank. “Instead, US rates dynamics and risk appetite should be the main drivers — and both suggest a downward bias.”
Outside of Australia, other data highlight on Tuesday include German business confidence, UK industrial orders along with a smattering of house price indicators from the United States.
None are likely to significantly shift financial markets, clearing the way for bond yields and investor risk appetite to dictate broader market movements yet again on Tuesday.
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