The Australian dollar is hanging tough despite weaker commodity prices

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The Australian dollar continues hover near multi-month highs, range trading for much of Tuesday’s session despite renewed weakness in commodity markets.

Here’s the scoreboard as at 8.10am AEDT.

AUD/USD 0.7961 , -0.0002 , -0.03%
AUD/JPY 87.91 , -0.10 , -0.11%
AUD/CNH 5.1240 , 0.0042 , 0.08%
AUD/EUR 0.6491 , -0.0001 , -0.02%
AUD/GBP 0.5772 , 0 , 0.00%
AUD/NZD 1.0944 , 0.004 , 0.37%
AUD/CAD 0.9894 , 0 , 0.00%

On what was an otherwise quiet data session, the prevailing theme was a modest lift in the US dollar after days of relentless selling pressure.

However, as noted by Elliot Clarke and Tim Riddell of Westpac, that move was largely due to weakness in other major currencies, rather than US dollar strength.

“Data releases remained light, despite the return of US markets, but less hawkish tones from ECB members, concerns that the German coalition may face distinct hurdles this coming weekend and a decent pullback in UK’s core CPI added to the less USD negative tone from Asia,” the pair wrote in their morning note.

“The relatively sharp pullback in commodities [saw the] AUD retreat.”

Crude oil futures dipped after scaling a fresh three-year peak while iron ore and copper both lost ground over the session.

However, as seen in the 5-minute AUD/USD chart below, after dipping in early European trade, the Aussie has now all but recovered those losses.

AUD/USD 5-Minute Chart

Turning to the day ahead, it promises to be another quiet one despite a pickup in the economic events calendar.

Domestically, the Westpac-MI Consumer Sentiment survey for January will be released at 10.30am AEDT. The separate ANZ-Roy Morgan confidence report hit the highest level since October 2013 last week, pointing to the likelihood that the Westpac survey may follow suit.

Arriving a hour later, the ABS will also release Australian housing finance figures for November. The number of owner-occupier loans is expected to come in flat from October.

Outside of those events, other highlights today include the final read of Eurozone inflation for December, US industrial production, the latest Beige Book on economic conditions from the US Federal Reserve along with speeches from FOMC members Charles Evans and Robert Kaplan.

In what looms at the most likely event to move markets, the Bank of Canada will also deliver its January monetary policy decision at 2am AEDT.

Markets are currently 90% priced for a 25 basis point rate hike to be delivered.

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