The Australian dollar is getting smoked

Photo: Ross Land/ Getty.
  • The Australian dollar tumbled on Thursday, completely erasing the gains achieved a day earlier.
  • The catalyst behind the decline was a series of remarks from Donald Trump’s new chief economic adviser Larry Kudlow.
  • RBA assistant governor Guy Debelle will speak today.

The Australian dollar fell heavily on Thursday, erasing all of the gains achieved on Wednesday following the release of stronger-than-expected Chinese economic data.

Here’s the scoreboard as at 7.55am AEDT.

AUD/USD 0.7794 , -0.0083 , -1.05%
AUD/JPY 82.87 , -0.88 , -1.05%
AUD/CNH 4.9326 , -0.0349 , -0.70%
AUD/EUR 0.6333 , -0.0035 , -0.55%
AUD/GBP 0.5592 , -0.0049 , -0.87%
AUD/NZD 1.0706 , -0.0034 , -0.32%
AUD/CAD 1.0169 , -0.003 , -0.29%

After being one of the top performing currencies a session earlier, the Aussie went hard into reverse on Thursday, weighed down by a series of remarks from Donald Trump’s new chief economic adviser Larry Kudlow.

In an interview on CNBC, Kudlow made it clear that he favours a strong US dollar, telling viewers that he “would buy King Dollar and sell gold”.

He added that no one has ever devalued their currency into prosperity and that he would like to see the dollar a “wee” bit stronger.

“This has resonated more in offshore markets than it did during Asian trade with the US dollar index currently up just under half a percent,” said Ray Attrill, Hhead of FX Strategy at the National Australia Bank.

On trade, Kudlow said that the Trump administration was readying a larger round of tariffs against Chinese imports, suggesting that a “tough response” was required.

“China needs a comeuppance on trade, I believe that,” Kudlow said.

That weighed heavily on the Australian dollar given its trade links to China, seeing the Aussie skid lower against all major currencies, especially the dollar and Japanese yen.

The greenback was also supported by a string of strong US data releases, along with potential positioning adjustments ahead of next weeks US Federal Reserve monetary policy meeting.

AUD/USD Hourly Chart

Turning to the day ahead, there’s a few bits and bobs that may interest traders amidst a sea of speculation over the prospect of a trade war developing between the US and China.

In Australia, RBA aAssistant governor Guy Debelle will speak at 9.45am AEDT at a ‘Financial Risk Day’ held in Sydney.

There’s not title for the speech, but given the name of the event and the fact that Debelle has moved Australian financial markets in the past, this event carries the potential to shift the Aussie.

Outside of Australia, most of the potential market moving events arrive in the second half of the session with the final reading of Eurozone inflation for February, along with building permits, housing starts, industrial production, JOLTS job openings and the University of Michigan consumer sentiment index in the US, the main headline acts.