The Australian dollar has finally found some buyers

Photo: Getty Images.
  • The Australian dollar remains under pressure, in part due to sharply lower iron ore prices.
  • It has moved back above the 77 cent level against the greenback in recent trade, recovering from a multi-month low struck in Asia.
  • The economic data and events calendar is fairly quiet on Tuesday, pointing to sentiment and technicals dictating direction.

The Australian dollar remains under pressure, suffering large declines against most major currency pairs on Monday.

However, after falling to lows not seen since late last year during Asian trade, the AUD/USD is now back above the 77 cent level courtesy of another bout of broad-based US dollar weakness.

Here’s the scoreboard as at 7.50am AEDT.

AUD/USD 0.7720 , 0.0005 , 0.06%
AUD/JPY 81.89 , 0.02 , 0.02%
AUD/CNH 4.8779 , -0.0025 , -0.05%
AUD/EUR 0.6257 , -0.0024 , -0.38%
AUD/GBP 0.5504 , -0.0032 , -0.58%
AUD/NZD 1.0651 , -0.0021 , -0.20%
AUD/CAD 1.0088 , -0.001 , -0.10%

After starting the session at .7715, the AUD/USD fell to as low as .7687 in Asia on the back of another steep drop in Chinese bulk commodity futures. However, those moves were reversed over the course of European and US trade as the US dollar weakened, leaving the Aussie almost unchanged from the session.

“The reality is that the US dollar has lost ground across the board and, as such, the Aussie dollar has lifted a little,” said Greg McKenna, Chief Market Strategist at AxiTrader.

“But make no mistake. It is far from out of the woods at the moment with a market funk adding to weakness in commodity prices, negative bond spreads, and the prospect of of Fed rates going above the RBA cash rate later this week, all acting as a weight on the Aussie.”

AUD/USD Hourly Chart.

Indeed, while the Aussie managed to claw back ground against the weaker greenback, it was hit hard against both the British pound and euro on Monday.

The former was supported by positive developments on Brexit negotiations.

“GBP outperformed across the board overnight on favourable Brexit related developments,” said Elias Haddad, Senior Currency Strategist at the Commonwealth Bank.

“The UK and the European Union (EU) have agreed on the terms for a 21 month transition period after the UK leaves the EU on 29 March 2019. This will help ease business fears over a post Brexit cliff edge which is GBP supportive.”

The euro also found support from a series of hawkish remarks from ECB policymakers, along with reports that discussions among the ECB Governing Council have now shifted from when to finish asset purchases to when it should start to lift interest rates.

The strength in the euro, in particular, largely explains the weakness in the US dollar on Monday.

Turning to the session ahead, there plenty of data and events scheduled both in Australia but none appears likely to have a lasting impact on the Aussie dollar.

And that includes the release of the minutes of the Reserve Bank of Australia’s (RBA) March monetary policy meeting at 11.30am AEDT.

We’ve heard plenty from the RBA since it met in early March, and little new economic data has arrived. Given the RBA are waiting for signs that wage and inflationary pressures are starting to build, it’s hard to see this being much of an event for traders.

Outside of the RBA minutes, markets will also receive weekly Australian consumer confidence data from ANZ-Roy Morgan at 9.30am AEDT along with Q4 house price data from the ABS at 11.30am AEDT.

Neither release will stir the Aussie.

Michele Bullock, Assistant Governor of the RBA, will also participate in a panel discussion at the ASIC Forum in Sydney from 3.15pm AEDT.

Outside of Australia, data highlights today include German producer prices and ZEW investor sentiment, Eurozone consumer confidence along with CPI, PPI and house price data from the UK.

For New Zealand dollar traders, the latest GDT dairy auction will also be held.