The Australian dollar just fell to a 4-month low

Photo by Scott Barbour/Getty Images

The Australian dollar is under pressure, falling to a fresh four-month low against the US dollar.

Here’s the scoreboard as at 7.50am AEDT.

AUD/USD 0.7627 , -0.0034 , -0.44%
AUD/JPY 86.64 , -0.24 , -0.28%
AUD/CNH 5.0755 , -0.0216 , -0.42%
AUD/EUR 0.6535 , -0.0027 , -0.41%
AUD/GBP 0.5813 , 0.001 , 0.17%
AUD/NZD 1.1047 , 0.0026 , 0.24%
AUD/CAD 0.971 , -0.0004 , -0.04%

After opening the week at .7661, the AUD/USD came under selling pressure midway through the North American session, falling to as low as .7617, the lowest level since July 11.

While it has recovered fractionally in recent trade, its saw the AUD/USD briefly break out of the one cent trading range it has been stuck in since the end of October.

“[The] AUD/USD has bent if not yet decisively broken the effective 0.7625-0.77 range that has held most of the price action since late October,” said Ray Atrill, Head of FX Strategy at the National Australia Bank (NAB).

“Amid a fairly mixed picture on commodity prices — and a largely stable US dollar — we’d point here to the combination of a fresh rise in US shorter dated yields and the earlier rise in the VIX to above 12 from just over 11 on Friday.”

US two-year note yields rose 3 basis points to 1.68%, leaving it at the highest level in close to a decade.

The lift in near-dated US yields undermined higher yielding currencies such as the Australian and New Zealand dollar’s during the session.

In a note released earlier this week, the NAB said the spread between near-dated Australian and US bond yields would likely determine what direction the AUD/USD would move in the period ahead.

Though the Aussie weakened against the greenback, it traded slightly firmer against the UK pound as ongoing political uncertainty continued to weigh.

AUD/USD 4-Hour Chart

After a slow start to the week, the economic events calendar picks up significantly today, potentially paving the way for an increase in market volatility.

In Australia, all eyes will be on the release of the the NAB’s monthly business confidence survey for October given the RBA has recently expressed increased optimism on the outlook for business investment.

In particular, there’ll be plenty of interest on the survey’s measures of employment, capacity utilisation and new orders — lead indicators on the outlook for hiring levels and investment.

The report will arrive at 11.30am AEDT.

Regionally, the big data release will come from China with industrial production, retail sales and fixed asset investment data for October arriving at 1pm AEDT.

“Industrial production usually gets star billing, year-on-year growth seen dipping to 6.2% from 6.6%,” says Attrill. “Retail sales growth is seen edging up top 10.5% from 10.3% while fixed asset investment slips to 7.3% year-to-date year-on-year from 7.5% in September.”

Later in the session, central bankers will take centre stage with Yellen, Draghi, Carney and Kuroda set to participate in a panel discussion at an ECB conference in Frankfurt.

You’ll rarely see a more powerful assembly of policymakers. It’s scheduled to kickoff at 9pm AEST.

Outside of that event, data highlights today include inflation figures from the UK, Spain and Germany, GDP from the eurozone, Germany and Italy, ZEW investor confidence from Germany along with NFIB small business confidence and producer price inflation from the US.

The API will also release weekly crude oil inventory data in the US.

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