The Australian dollar is edging higher ahead of China's latest economic report card

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  • The Australian dollar edged higher on Monday, helped by renewed, broad-based US dollar weakness.
  • China will release a raft of major economic data today, headlined by Q1 GDP.
  • There’s also major economic data on the way from the UK and US, along with several speeches from US FOMC members.

The Australian dollar rose against the greenback on Monday, underpinned by remarks from Donald Trump that imply he is comfortable with further US dollar weakness.

Here’s the scoreboard as at 7am in Sydney.

AUD/USD 0.7780 , 0.0014 , 0.18%
AUD/JPY 83.33 , 0.02 , 0.02%
AUD/CNH 4.8742 , 0.0048 , 0.10%
AUD/EUR 0.6284 , -0.0014 , -0.22%
AUD/GBP 0.5425 , -0.0026 , -0.48%
AUD/NZD 1.0565 , 0.0018 , 0.17%
AUD/CAD 0.9771 , -0.0016 , -0.16%

The broader theme of the session was once again movements in the US dollar, this time to the downside.

After trading sideways for much of the Asian session, the USD selling kicked off in early European trade, seeing the US dollar index fall back towards the lows seen late last week.

Losses accelerated shortly before US markets opened following a tweet from Donald Trump which accused Russia and China of “playing the Currency Devaluation game”.

“This suggests Trump may be more comfortable with a lower USD,” said Elias Haddad, Senior Currency Strategist at the Commonwealth Bank.

“Interestingly, Trump’s accusation was not substantiated by the April US Treasury semi annual reports on the foreign exchange policies of the major US trading partners.

“The report found that no major US trading partner met all three of the criteria to be considered a currency manipulator.”

The tweet helped to push the AUD/USD back towards the 78 cent level, an area it failed to break above late on Friday.

AUD/USD Hourly Chart

Turning to the day ahead, the movements in the Aussie look set to be dominated by the release of major economic data from China, headlined by Q1 GDP.

From a year earlier, GDP is tipped to have grown by 6.8%, unchanged from the pace reported in the final three months of 2017. The GDP figure has either printed in line or 0.1 percentage points above market expectation every quarter since mid-2015.

China will also release urban fixed asset investment, retail sales and industrial output figures for March alongside the GDP report. In the past, these figures have tended to have more influence on the Aussie dollar than the GDP report.

All four data points are scheduled to arrive at midday AEDT.

Before that event arrives, markets will also receive the minutes of the Reserve Bank of Australia’s (RBA) April monetary policy meeting at 11.30am AEST.

“We don’t expect any surprises from the RBA Minutes,” says Rodrigo Catril, Senior FX Strategist at the National Australia Bank.

“The key message should be that a gradual decline in the unemployment rate is expected, along with some pick up in wages and an eventual return of inflation to target. So the main inference is that monetary policy will also evolve gradually.”

Outside of those events, Japan will also release industrial production figures for February in the latter half of the Asian session.

Later in the day, data highlights include UK unemployment, Italian inflation, German investor confidence along with housing starts, building approvals and industrial production figures from the United States.

On the monetary policy front, FOMC members Williams, Quarles, Harker and Bostic will also be in action.

Finally, for the Kiwi dollar traders, the latest GDT dairy auction will also take place.

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