The Australian dollar continues to rally

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  • The Australian dollar continued to rally against the greenback on Tuesday as weaker commodity prices was offset by lower US bond yields.
  • The main event for markets today will be the release of US CPI for February.
  • There’s plenty of data released in Australia although none appears likely to create a major reaction in the Aussie dollar.

The Australian dollar continued to rally on Monday, adding to the gains achieved on Friday as a weak US wage report for February continued to reverberate across the markets.

Here’s the scoreboard at 7.40am AEDT.

AUD/USD 0.7868 , 0.0019 , 0.24%
AUD/JPY 83.7 , -0.12 , -0.14%
AUD/CNH 4.9751 , 0.0096 , 0.19%
AUD/EUR 0.6378 , 0.0003 , 0.05%
AUD/GBP 0.5659 , -0.0007 , -0.12%
AUD/NZD 1.0785 , 0.0004 , 0.04%
AUD/CAD 1.0106 , 0.0053 , 0.53%

David de Garis, economist at the National Australia Bank, said it was a quiet session with a lack of economic data and news flow ensuring modest moves ahead of the release of US consumer price inflation (CPI) for February on Tuesday.

“It’s been a night of very contained markets with US Treasury yields trading within recent ranges, stocks mixed, and the USD losing a little more ground against most majors,” he said in his morning note.

“Most currencies have made up some ground on a soggy USD, though the NZD and the CAD have underperformed somewhat, the CAD seemingly held back by a pull-back in oil prices at the start of the week.”

Despite weakness in crude oil, base and bulk metals during the session, that was not enough to derail the Aussie’s push higher, rising to .7879 at one point before easing in the latter parts of trade.

AUD/USD Hourly Chart

Turning to the session ahead, it will likely be a quiet one as traders await the release of US CPI later in the day.

In Australia, markets will receive weekly consumer confidence data from ANZ Bank while the National Australia Bank will also release its monthly business confidence survey.

The ABS will also present housing finance figures for January while RBA assistant governor Michelle Bullock will also speak during the session.

Despite the busy calendar, none of those events appears likely to move the Aussie significantly in one direction or another.

Regionally, a speech from RBNZ governor Grant Spencer is the sole headline act.

Later in the day, the main event for markets will come from the release of US CPI data for February. Both the headline and core CPI readings are expected to lift by 0.2% apiece from January.

“The soft US wages report for February released on Friday suggests some short term downside risk to inflation outcome,” says Joseph Capurso, senior currency strategist at the Commonwealth Bank.

The UK will also release updated budget figures while weekly crude oil inventory figures from the API and NFIB Small Business Optimism for February will be out in the US.

Bank of Canada governor Stephen Poloz will also deliver a speech.