interbank midrate

The Australian Dollar (AUD), British Pound (GBP) sits deep within recent ranges into Tuesday, falling back to 0.5240 (1.9080) off the open as markets await today’s RBA cash rate release. The Reserve Bank of Australia will keep their cash rate on hold later today at 4.35% with Governor Bullock remaining on alert about lingering inflation. She said recently these problems are localised not global. With recent PMI data showing a slowdown in the economy this should be reflected in the 3rd quarter data and 4th quarter CPI. We expect the Aussie to drift lower over the week.

The current interbank midrate is: AUDGBP 0.5240 GBPAUD 1.9083

The interbank range this week has been: AUDGBP 0.5238- 0.5271 GBPAUD 1.8971- 1.9090

The AUD remains in inflationary conditions as does the GBP, but the interest rate differential favours the Pound. The UK has experienced amongst the highest inflations levels in Europe and is well advanced in the rising interest rate environment. Although the differential favours the GBP, they may be reaching the end of the cycle and the Bank of England may choose to maintain at high levels, rather than raise rates again. The RBA has indicated that they may support further rate rises and this may be a short-term support for the AUD.

Current Level: 0.5210
Support: 0.5190
Resistance: 0.5280
Last week’s range: 0.5203 – 0.5242

US Dollar (USD) weakness continues post the US Thanksgiving holiday, risk currencies getting another boost from this. The Australian Dollar (AUD) clawed back early losses from 0.5215 (1.9180) to 0.5235 (1.9100) this morning rebounding off the 50% fib key level. Aussie CPI y/y prints tomorrow and should reflect a small drop from 5.6% to around 5.2%. The new RBA chief Michele Bullock has been hawkish of late with inflation concerns, will she keep the same line?

Current Level: 0.5233
Support: 0.5170
Resistance: 0.5280
Last week’s range: 0.5215 – 0.5259

The British Pound (GBP), Australian Dollar (AUD) traded in a tight range over the week in thin liquidity pivoting around the 0.5235 (1.9100) area for the most. UK Manufacturing was the only highlight this week printing better than markets were predicting overnight at 46.7 vs 45.0 for October up on September’s 44.8 on the index. Although the data was positive, new orders have decreased 3 months running as the manufacturing sector slows. The news sent the Pound higher from 1.9060 (0.5250) to 1.9135 (0.5225) post the news. Australian monthly y/y CPI Wednesday is our focus with a small drop expected.

The current interbank midrate is: AUDGBP 0.5230 GBPAUD 1.9120

The interbank range this week has been: AUDGBP 0.5214- 0.5259 GBPAUD 1.9015- 1.9179

Last week’s US drop in inflation release has put the US Dollar (USD) on notice. Markets are now focusing on clues as to when the Federal Reserve might “cut” rates. Up until recently the rhetoric was “high for long”. Prices Monday in the cross extended Friday’s close around 0.6500 reaching 0.6560 this morning looking like we may see the highest daily close in the pair since 8 August earlier this year. Key Fib levels suggest the pair could get strong resistance around 0.6600 – the 50% zone of the low of 0.6300 and high at 0.6900 in July. In the meantime, RBA minutes later today should confirm further tightening of policy may be required to bring inflation under control, data dependent with evolving risks.

Current Level: 0.5244
Support: 0.5165
Resistance: 0.5265
Last week’s range: 0.5177 – 0.5258