interbank midrate

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: 0.6560
Support: 0.6300
Resistance: 0.6800
Last week’s range: 0.6348 – 0.6542

US inflation data surprised markets early Wednesday, the report showing yearly inflation has fallen from 3.7% to 3.2% with energy, utility and gas prices all declining in the month of September. This news confirms the Fed will most likely be taking off the table a hike at their December policy meeting. Treasury yields plunged and the US Dollar (USD) was heavily sold off across the board. Against the Aussie price moved to just under 0.6550 from around 0.6380. Meanwhile Aussie unemployment moved higher off 3.6% to 3.7% beating out expectations of 3.6% suggesting the RBA may have work still to do. Risk sentiment remains tender with the conflicts in Gaza, we don’t expect the AUD to move up past current levels over the medium term with overall bias still to the downside.

The current interbank midrate is: AUDUSD 0.6470

The interbank range this week has been: AUDUSD 0.6352- 0.6542

Declines in Metal/commodity prices have led to a steep drop in the Australian Dollar (AUD) last week against the US Dollar (USD) ,closing at 0.6350 after opening around the 0.6520 area. The recent hawkish tone by the RBA hasn’t helped the Aussie after the RBA hiked rates from 4.10% to 4.35% last week. Indicators suggest we may have seen a base form at the 0.6280 support zone, a November close below this area however would suggest a deeper downtrend, certainly the multi-year low at 0.6200 could come under pressure. On the calendar this week is the US CPI with a forecast of a dip to 3.3% from 3.7% y/y. Last week Powell said the Fed had not done enough to bring down inflation, we shall see.

Current Level: 0.6377
Support: 0.6300
Resistance: 0.6500
Last week’s range: 0.6337 – 0.6522

The Australian Dollar (AUD) has given back last week’s gains against the US Dollar (USD) falling hard to 0.6360 this morning. Pockets of recoveries midweek saw the pair hold around 0.6400 for a short time but with markets diverting back to “risk off” flow has been unwound into the greenback. The RBA hiked their interest rate to 4.35% as widely expected to a 12 year high. New governor Bullock said she was ready to hike again if required. Inflation is still too high and has proven more persistent than it was a few months back. The release and post sell off in the Aussie left punters scratching heads as usually hikes attract investors buying the associated currency. Attention now will divert to the Australian wages data publishing next week- a sharp rise in numbers may point to another rate hike in December. We expect the current bear trend to continue into the weekly close.

The current interbank midrate is: AUDUSD 0.6365

The interbank range this week has been: AUDUSD 0.6361- 0.6522