The Australian dollar has stabilised after falling to an one-month low earlier on Tuesday, largely mirroring the movements in global stock markets seen during the session.
Here’s the scoreboard as at 7.50am AEDT.
AUD/USD 0.7888 , 0.0011 , 0.14%
AUD/JPY 86.4 , 0.47 , 0.55%
AUD/CNH 4.9544 , -0.0169 , -0.34%
AUD/EUR 0.6376 , 0.0007 , 0.11%
AUD/GBP 0.5656 , 0.0013 , 0.23%
AUD/NZD 1.0801 , -0.0038 , -0.35%
AUD/CAD 0.9876 , 0.0003 , 0.03%
With 70 minutes left to trade in the session, the AUD/USD sits at .7888, recovering after falling to .7836 earlier in the day.
Greg McKenna, Chief Market Strategist at AxiTrader, said the Aussie’s movements reflected those in global equities, falling in Asia and Europe before recovering in North American trade.
“The US dollar and the Japanese Yen were big winners at one point when the stock market funk was at its height, but they have since lost some ground as US stocks and the sense of fear in markets has subsided a little,” he says.
“So Euro is back near 1.2400, and USD/JPY is back above 109.
“The Aussie too is well off its low of 0.7836 having rallied around half a cent.”
The recovery in stocks helped to offset a raft of disappointing Australian economic data released during the session with trade and retail sales figures for December both undershooting market expectations by some margin.
There was also little reaction to the Reserve Bank of Australia’s (RBA) February interest rate decision with limited market movements seen following its release. The general consensus among economists is that while the bank is growing in confidence about the outlook for economic growth and inflation, it is in no rush to deliver a preemptive hike in official interest rates.
The disappointing economic data and neutral policy statement delivered by the RBA, along with early losses in European stocks, saw the AUD/USD briefly dip to its session lows before recovering in recent trade.
Turning to the session ahead, there is little in the way of major economic data for markets to digest, hinting that sentiment, particularly in stock markets, will dictate the Aussie’s direction.
Domestically, the Ai Group will release its Performance of Construction Index (PCI) for January at 9.30am AEDT.
Before that event arrives, New Zealand will also release unemployment and wage data for the December quarter at 8.45am AEDT. This release carries the potential to move the Aussie, especially against the Kiwi dollar which rallied strongly on Tuesday.
Later in the session, markets will also receive German industrial output, French trade data, Chinese FX reserves, Halifax house prices from the UK along with consumer credit and weekly crude inventory data from the EIA in the US.
On the Fed front, FOMC members Evans and Dudley are also scheduled to speak.
The Reserve Bank of India will also announce its February monetary policy decision.