Currencies mixed as ECB delivers dovish statement

AUD - Australian Dollar

The Australian dollar opens Friday morning slightly higher when valued against its US counterpart, boosted by positive risk sentiment in equity and commodity markets. With the USD index falling 0.1% on Thursday, AUD/USD rose from 0.7360 to 0.7397 throughout trade. Having been rejected on approach to 0.7400, the pair has drifted slightly lower to open the session around the 0.6965 handle. The New Zealand dollar was also firmer, rising from 0.6960 to 0.6986, however the outperformance of the AUD saw the AUD/NZD cross rate drift higher to 1.0600 before falling again.

The major talking point for markets overnight was the ECB monetary policy decision. Leaving the current policy settings unchanged and reiterating that the bond purchase program is set to run until at least March 2022. The accompanying forward guidance was more dovish than expected, allowing the AUD/EUR to grind higher to 0.6270.

Looking ahead we have nothing on the domestic docket for today, with the only offshore releases of note being euro area PMI’s, UK retail sales and US PMI’s. Traders will be looking to see if a break above 0.7400 can be sustained.

Key Movers

Another good day for commodity markets with Crude oil futures continuing their ascent, rising a further 2% on Thursday along with strong rises in copper and gold spot prices. Iron ore was off 4%, but still trades above $200.

In currency land, the GBP was the best performer of the day, rising 0.4% against the greenback to 1.3770. Interestingly, there was no obvious catalyst for the move despite some further dovish commentary from BOE deputy Governor Broadbent on the ‘transitory inflation’ in the UK economy.

Expected Ranges

AUD/USD: 0.7340 - 0.7450 ▲

AUD/EUR: 0.6230 - 0.6330 ▲

GBP/AUD: 1.8590– 1.8700 ▲

AUD/NZD: 1.0540- 1.0620 ▲

AUD/CAD: 0.9230 - 0.9300 ▲