AUD - Australian Dollar
The Australian dollar outperformed its major counterparts through trade on Thursday, buoyed by an upswing in market sentiment. Equities and commodity currencies rallied following reports Russian President Putin will proffer support to Europe, in a bid to fix the current gas/energy crisis and a short-term deal to extend the US debt ceiling was reached. Having tracked sideways for much of the domestic session, bouncing between 0.7270 and 0.7290, the AUD extended through 0.73 US cents overnight, touching intraday highs at 0.7325, its highest level in the last 3 weeks. Renewed optimism ahead of the re-opening of the NSW economy have also helped underpin demand for the AUD. That said, markets were reluctant to extend significantly beyond the 0.73 handle ahead of tonight’s all important US non-farm payroll print. Leading indicators suggest a robust recovery through September and a strong read all but ensures the Fed will begin discussions around tapering bond purchases next month. Watch resistance on moves above 0.7320 and support on forays below 0.72 US cents.
Safe haven currencies were the days big losers as the USD, CHF and JPY all underperformed when valued against the CAD, AUD and NZD. The Dollar index fell 0.1% on the day, propped up by further euro weakness. The single currency found some support on moves approaching 1.1550, buoyed by news Russia will step in and increase gas supplies through its Ukrainian pipeline, in a bid to stabilise the natural gas market. Gas prices in Europe and the UK edged marginally lower on the day, down around 5% overnight. The panic that swept markets through the start of the week has eased for now, yet prices remain well above those just a few months ago and ongoing shortages continue to pose concerns and will continue to weigh on both the euro and the Great British pound.
Risk demand found added support following headlines announcing a short-term fix to US debt ceiling constraints had been struck. While the can has been simply kicked down the proverbial road, it at least removes a key risk event from the near-term narrative.
Our attentions turn now to US non-farm payroll numbers. Labour market performance has long been chronicled as critical to guiding fed policy direction and with the Fed set to meet on November 4th this will be the last labour market profile available. A strong read near expectations should firm bets the Fed will begin discussions to taper bond purchases in November, while a miss to the downside could drive volatility into the weekly close.
0.7180 - 0.7380 ▲
AUD/EUR: 0.6220 - 0.6370 ▲
GBP/AUD: 1.8480 - 1.8720 ▼
AUD/NZD: 1.0490 - 1.0590 ▲
AUD/CAD: 0.9120 - 0.9220 ▲