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The Australian dollar lifts as Chinese stocks rally

Photo by Andrew Hone/Getty Images

The Australian dollar held on to its late Asian session gains overnight, buoyed by a bounce in global stock markets and improved investor sentiment.

Here’s the current Australian dollar scoreboard at 8.30am AEDT.

  • AUD/USD 0.6915 , 0.0052 , 0.76%
  • AUD/JPY 81.29 , 0.78 , 0.97%
  • AUD/CNH 4.5558 , 0.0388 , 0.86%
  • AUD/EUR 0.6333 , 0.0034 , 0.54%
  • AUD/GBP 0.4879 , 0.0061 , 1.27%
  • AUD/NZD 1.0671 , 0.0044 , 0.41%

AUD/USD firmed a bit during the overnight session on improving risk sentiment, wrote Elias Haddad, currency strategist at the CBA in his morning note.

“European equities rallied and most commodity prices are higher. The improvement in risk sentiment during the European session may stem from participants extrapolating that Chinese policymakers could soon act to support growth.”

While China’s GDP report, along with the prospect of further fiscal and monetary policy support, certainly helped to boost sentiment overnight, as the chart below from Thomson Reuters reveals, all of the Aussie’s rally corresponded with a huge surge in Chinese stock market yesterday.

Thomson Reuters.

Shown in white, the benchmark Shanghai Composite rallied hard just before its mid-session break and again in the latter parts of trade, taking the Aussie dollar from a low of .6837, shown in red, to as high as .6920.

With only the Westpac-MI Australian consumer sentiment index for January out in Asia, the recent price action suggests that the performance of Chinese stocks, along with movements in the offshore traded yuan, or CNH, will likely be influential on the Australian dollar’s performance today.

The PBOC’s Chinese yuan fixing will occur at 12.15pm AEDT. This will be followed by Chinese stocks that will resume trade shortly after at 12.30pm AEDT.

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