The Chinese returned to work yesterday after a week long layoff and in doing so initially crushed the price of commodities almost across the board and causing some weakness in the Aussie dollar. However the flurry of trading that sent base metal as much as two percent lower yesterday arvo may have just been some initial re-balancing as commodities markets and the Aussie dollar recovered all the lost ground reasonably quickly. In fact AUD/USD is higher today than this time yesterday, while AUD/GBP teeters around 0.5600.
Bloomberg’s top story reads like a battle of the titans this morning and gives some credence to the notion that no one really knows which direction the AUD will move with the title “Funds Clash Over Which Way the Australian Dollar Is Headed”. Essentially you have one camp of economists who believe that the AUD is headed lower as a result of rising interest rates around the world (while Aussie rates remain stagnant) while the other camp believes a new mining super cycle may be the catalyst for the AUD to test previous highs above 0.8500 and even beyond. Personally I think both assumptions are correct and hence will likely cancel each other out meaning….drum roll…expect more of the same. AUD/USD between 0.7200-0.8200 seems like a reasonable range to me over the next 12 months.
AUD EXCHANGE RATES:
AUD/USD – 0.7843
AUD/GBP – 0.5619
AUD/EUR – 0.6362
AUD/NZD – 1.0684
AUD/JPY – 83.727
USD/BTC – $9,982
COMMODITIES:
Gold – A$1696/oz
Silver – A$21.17/oz
WTI – US$62.63/barrel
DATA RELEASES TODAY:
EUR – CPI at 9.00pm
***Above rates are indicative wholesale rates and intended as a guide only***
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Patrick Downes
Senior Corporate FX Dealer
Phone Patrick – 0431 278 632
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