The Australian dollar is rebounding as investor risk appetite improves

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  • The Australian dollar recovered on Monday as investor risk appetite improved.
  • It’s a busy economic calendar in Australia today with retail sales, GDP inputs and the RBA’s March interest rate decision arriving during the session.
  • The economic calendar will quieten down later in the session with few market-moving events of note.

The Australian dollar is recovering after an early dip on Monday, finding support from a return of investor risk appetite in the North American session.

First, here’s the scoreboard as at 8.15am AEDT.

AUD/USD 0.7762 , 0 , 0.00%
AUD/JPY 82.39 , 0.28 , 0.34%
AUD/CNH 4.9154 , 0.0039 , 0.08%
AUD/EUR 0.6292 , -0.0006 , -0.10%
AUD/GBP 0.5606 , -0.0023 , -0.41%
AUD/NZD 1.0739 , 0.0009 , 0.08%
AUD/CAD 1.0083 , 0.0085 , 0.85%

After falling to as low as .7727 in Europe following the release of mixed Australian economic data and ongoing fears of an escalating trade war between the US and other major nations, the AUD/USD found its mojo soon after North American markets opened, rallying back to .7778 on the back of a decisive shift in investor risk appetite, especially among stock traders.

“Equity markets are back in the black this morning with Treasury yields modestly higher amid further focus on Trump tariffs, with an attempted push back from two key GOP members,” said David de Garis, Economist at the National Australia Bank.

“House Speaker Paul Ryan said that he is exceptionally worried about a trade war, urging the White House not to proceed [with the introduction of trade tariffs on US steel and aluminium imports]”.

Ryan’s statement coincided with a sharp rally in US stocks, seeing them recover from early losses to sit up more than 1% for the session.

Speculation that Trump’s tariff announcement is part of a larger plan to secure better trade deals for the US was also cited as a reason for the rally in riskier assets.

The move assisted the bounce in the Australian dollar, along with a strong rebound in crude prices which has implications for LNG prices.

AUD/USD 5-Minute Chart

Against the crosses, the Aussie lost ground against the British pound — this time on speculation of a positive Brexit outcome — but gained against the Canadian dollar as US President Donald Trump signaled out the nation specifically in a tweet on NAFTA negotiations.

Turning to the session ahead, it will be a busy one for Aussie dollar traders with a raft of domestic data released during the session.

Australian retail sales for January will be released at 11.30am AEDT with an increase of 0.4% expected, largely reversing a drop of 0.5% in December.

Alongside the retail sales report, markets will also receive the last of Australia’s Q4 GDP inputs ahead of the actual release on Wednesday.

Markets will be specifically looking at the impact of net exports on GDP along with the contribution of government expenditure. The former is forecast to lop 0.6 percentage points off quarterly GDP, while the latter is expected to contribute to growth.

Following the data deluge, the Reserve Bank of Australia (RBA) will then release its March interest rate decision at 2.30pm AEDT. No one expects that rates will move, meaning all interest will yet again fall on the accompanying monetary policy statement.

This 10-second guide has more on what to look out for.

Outside of Australia, the data calendar is fairly quiet with US factory orders and revised durable goods orders the headline acts.

Bill Dudley, New York Fed President, will also be in action while for New Zealand dollar traders the latest GDT Dairy auction will also take place.

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