DAILY CURRENCY OUTLOOK

* AUD/USD reaches 0.6948 overnight. New 5-month high driven by US interest rate speculation
* BIG week for Inflation data. Releases from Australia and China (tomorrow) and the US (Thurs)
* RBA next meets 7 Feb; US Fed next meets 31 Jan – 1 Feb

For the first Daily Currency Outlook of the year please find a brief review of the year that was and what to consider for the year ahead.

COVID and Russia’s invasion of Ukraine in February was largely to blame for inflation in some developed countries reaching levels not seen in decades. Major Central Banks were left with no choice but to increase interest rates to combat inflation, which in turn heavily impacted the global currency market. After a high of 0.7582 in early April the AUD/USD spent most of the year on the backfoot (touching a low of 0.6195 mid Oct) to close out around 68 cents.

More uncertainty is expected in the first half of 2023 and these major factors will continue to influence currency movements this year:

1. Inflation 2. Interest Rates 3. Key Economic data eg Employment, GDP, Retail Sales… 4. War in Ukraine 5. Chinese COVID situation