13th October 2021 - The aussie remains firm, boosted by higher commodity prices

Market Headlines

Markets remained cautious ahead of the latest US company earnings reports, stagflation concerns at the fore. The S&P500 is down 0.2%, the defensive US dollar is slightly higher, and bond yields are lower. US 2yr treasury yields ranged between 0.33% and 0.36%, while the 10yr yield fell from 1.62% to 1.58%. Australian 3yr government bond yields (futures) traded around 0.76% - a 20-month high, while the 10yr yield fell from 1.76% to 1.71%.

Commodities, Brent crude oil futures fell 0.3% to $84, copper fell 0.9%, gold rose 0.3%, and iron ore fell 5.7%.

Overnight Currency Range

AUD/USD 0.7332 0.7384

EUR/USD 1.1522 1.1570

GBP/USD 1.3568 1.3635

USD/JPY 113.00 113.78

NZD/USD 0.6925 0.6969

USD/CAD 1.2434 1.2499

USD/CNH 6.4497 6.4640

AUD/JPY 82.97 83.79

AUD/NZD 1.0578 1.0611

AUD Thoughts

The Australian dollar has pulled back on Tuesday’s US session, returning to 0.7360 area after having reached fresh one-month highs at 0.7385. The pair, however, is showing strength despite the rising concerns about surging inflation pressures and has rallied about 2.5% in October so far.

Higher commodity prices are boosting AUD’s rally - The Aussie seems unaffected by the US dollar’s strength and has maintained its positive tone this week. The increasing commodity prices, with iron ore, one of Australia’s main exports surging amid higher demand from China, is driving the AUD higher across the board. Beyond that, the relaxation of COVID-19 restrictions in Sydney, the country’s most populated city, which has gone through a four-month lockdown, has increased optimism about a post-pandemic recovery while the authorities accelerate the pace of vaccination.

AUD/USD has broken out resistance at 0.7312/17, which suggests a short-term correction higher to the 2021 downtrend at 0.7365, which we then expect to cap the market. Thereafter, support is seen at 0.7291/87 initially, below which would confirm a turn back lower and retest of 0.7179/70 lows.

Event Risk Data Today

Australia: Westpac-MI Consumer Sentiment has continued to show impressive resilience of late, the September read of 106.2 comfortably above those of the 5 years prior to the pandemic.

New Zealand: REINZ housing data continues to highlight the effect of restrictions on sales, but also strength in price growth. September food prices and October ANZ business confidence are also due.

China: September’s trade balance is expected to show continued strength in the world’s demand for Chinese goods.

Europe: Industrial production is expected to reverse July’s gain in August. The UK’s August trade balance is also due.

United States: The minutes of the September FOMC meeting will provide greater clarity on the Committee’s view of the risks. The September CPI is likely to print a robust 0.3% gain, as it did in August.

Recent Posts

See All


This material is provided by Navigate Global Payments (Navigate) ACN 615 699 888, AFSL 502711.  The material contains general commentary only and does not constitute investment or any other advice.  Certain types of transactions, like futures, options and high yield securities can be risky, and not suitable for all investors.  This information has been prepared without considering your objectives, financial situation or needs.  Please seek your own independent legal or financial advice before proceeding with any investment decision.  The information is believed to be accurate at the time of compilation and is provided in good faith.  Navigate does not warrant the accuracy or completeness of any information contributed by a third party. The information is subject to change without notice and Navigate is under no obligation to update the information. The information contained in this material are opinions of the author at the time of writing and does not constitute an offer, recommendation to act, a solicitation of an offer, or an inducement to subscribe for, purchase or sell any financial instrument or to enter a legally binding contract.  This information, including any assumptions and conclusions is not intended to be a comprehensive statement of relevant practise or law that is often complex and can change.  Past performance is not a reliable indicator of future performance. Any forecasts given in this material are predictive in character.Navigate Global Payments Pty Ltd nor its related parties or officers accepts no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the information contained or related to this site.