interbank midrate

The Australian Dollar (AUD) has been unable to hold the key level around 0.6750 against the US Dollar (USD) Friday dropping to close out the week at 0.6675. Risk took on water post the release of the US Non-farm Payroll release Friday with the jobs report coming in poor dragging risk currencies lower. Unemployment ticked lower from 4.3% to 4.2% with markets digesting this week’s inflation report and next week’s Federal Reserve monetary policy and whether the central bank will only cut 25 points instead of the earlier forecasted 50 points. Odds now of quarter percent cut are now around 75% pending how inflation prints Thursday. Year on year numbers is predicted to come in at 2.6% down from 2.9%, anything north of 2.6% will be a game changer. Action above 0.6700 this week will be challenging.

Current Level: 0.6652
Resistance: 0.6700
Support: 0.6620
Last Weeks Range: 0.6684- 0.6794

The AUD has struggled to perform over the last week, with weaker than expected GDP growth confirming the worst economic conditions since the recession of the 1990’s. The RBA warns inflation remains stubbornly high and interest rates will ‘remain higher for longer’. This should offer support to the currency but weakening economic conditions undermine the currency. The softer economy in the US and Europe, also impact commodity prices negatively, through lower demand, adding to the conundrum.

The current interbank midrate is: AUDUSD .6740

The interbank range this week has been: AUDUSD .6680 – .6790

The AUD has slipped back below 0.6800, as a resurgent reserve takes the shine off the currency recovery. Commodity prices have been slowly improving and the stubborn position of the RBA has also supported a rise in the AUD. This week will see the release of the Australian GDP growth number, on Wednesday the 4th of September. This is expected to be around 1%, so positive, but weak. The weaker economy and stubborn inflation catches the RBA ‘between a rock and a hard place’.

Current Level: 0.6785
Resistance: 0.6830
Support: 0.6600
Last Weeks Range: 0.6751- 0.6821

The AUD Dollar has been travelling reasonably well, as global economic conditions improve and support for Australian commodities gathers steam. The RBA has cited serious and stubborn inflation in the economy, and promises to extend their elevated interest rate levels, until these pressures can be extinguished. This will provide support for the AUD, as interest rate differentials become more attractive, relative to other global Central Banks, and their respective currencies. The AUD has looked to regain 0.6800, with support expected to continue.

The current interbank midrate is: AUDUSD .6798

The interbank range this week has been: AUDUSD .6720 – .6820

The RBA is resisting the pressure to cut interest rates, as all but the Bank of Japan and the RBA, have indicated a preference for. The RBA board still see dangerous inflationary pressure, which will only encourage them to hold rates, at these elevated levels for longer. This has created support for the AUD, which has regained 0.6800, following the Jackson Hole announcements. Commodity prices are heavily dependent on economic sentiment, and the AUD suffered a heart tremor, when markets suffered a correction early in August, but these seem to be unwinding.

Current Level: 0.6768
Resistance: 0.6800
Support: 0.6730
Last Weeks Range: 0.6660- 0.6770