The Australian dollar continues to surge against the greenback

Photo: iStock

The Australian dollar continues to surge against the greenback, opening the new trading week above the 81 cent level for the first time since January 2015.

Here’s the scoreboard as at 7.50am AEDT.

AUD/USD 0.8105 , -0.0004 , -0.05%
AUD/JPY 88.09 , 0.04 , 0.05%
AUD/CNH 5.1264 , -0.0006 , -0.01%
AUD/EUR 0.6523 , -0.0001 , -0.02%
AUD/GBP 0.5729 , 0.0007 , 0.12%
AUD/NZD 1.1033 , 0.0016 , 0.15%
AUD/CAD 0.998 , -0.0004 , -0.04%

Continuing the theme seen earlier in the week, the story of Friday’s session was again broad based US dollar weakness, again prompted by remarks from the World Economic Forum in Davos, this time from Bank of Japan Governor Kuroda.

“[The Japanese yen] was given a further boost late last week after BoJ Governor Kuroda said that inflation was finally moving towards the 2% target,” said David de Garis, Economist at the National Australia Bank.

The hawkish remarks saw the USD/JPY fall to as low as 108.27, leaving it at the lowest level since mid-September last year. It also weighed upon the broader US Dollar Index (DXY) which fell to a fresh three-year low of 88.438.

Adding to the dollar’s woes, US economic growth undershot market expectations in the December quarter of last year, a result partially driven by surging import demand.

The advanced Q4 GDP reading came in at a seasonally adjusted annual rate of 2.6%, below the 3% level expected by economists.

Net exports lopped 1.1 percentage points off growth during the quarter as imports grew nearly twice as fast as exports, rising 13.9% compared to an increase of 6.9%.

On top of Kuroda’s remarks, the US GDP result weighed on the greenback, helping to push the AUD/USD to .8134, the highest level since May 2015.

AUD/USD Weekly Chart

Turning to the day ahead, there’s nothing on the economic calendar to excite currency traders, likely ensuring a period of consolidation ahead of what will be a busy week of data releases.

The only major event arrives in the US with the release of personal incomes and consumption data for December, including core PCE inflation, the US Federal Reserve’s preferred inflation measure.

Most of this detail was contained within Friday’s GDP report, likely ensuring it will come and go without causing too much fuss across currency markets.

Given the quiet data calendar, the Aussie may be influenced by movements in the Chinese yuan seen during the session, continuing the pattern seen last week as the People’s Bank of China (PBoC) set the mid-point for the USD/CNY at the strongest level in several years.

Monday’s yuan fix will occur soon after 12.15pm AEDT.

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