The Australian dollar continues to languish near multi-month lows


The Australian dollar rebounded on Tuesday after falling to a four-month low against the greenback, benefiting from a strong Australian business confidence report released earlier in the session.

However, it put in a mixed performance against the crosses, losing ground against a rampant euro.

Here’s the scoreboard as at 8.10am AEDT.

AUD/USD 0.7630 , 0.0009 , 0.12%
AUD/JPY 86.55 , -0.01 , -0.01%
AUD/CNH 5.0637 , -0.0078 , -0.15%
AUD/EUR 0.6469 , -0.0061 , -0.93%
AUD/GBP 0.5794 , -0.0014 , -0.24%
AUD/NZD 1.1092 , 0.0056 , 0.51%
AUD/CAD 0.9718 , 0.0014 , 0.14%

Having fallen to as low as .7611, the AUD/USD rebounded following the release of the NAB’s Australian business confidence survey with business conditions rising to the highest level on record in October.

From there, the Aussie endured choppy trade throughout European and North American trade, moving in a modest 40 pip range.

Weaker commodity prices following the release of soft Chinese economic data were offset by a weaker US dollar.

The greenback was undermined by renewed doubts over US tax reforms, along with a surge in the euro which jumped by over 1% following the release of strong German economic data, including a robust Q3 GDP report.

There was little reaction to news that US core producer price inflation — excluding energy and food prices — jumped by 0.4% in October, double the increase expected.

As a result, the AUD/USD is currently trading at .7630, up 0.12% for the session.

AUD/USD Hourly Chart

Turning to the day ahead, there’s plenty of risk events for traders to navigate.

In Australia, the Westpac-MI consumer sentiment report for November will be released at 10.30am AEDT. In October, optimists outnumbered pessimists for the first time in close to a year.

One hour after that report arrives, Australia’s Q3 Wage Price Index will also be released.

This report has taken on increased importance in recent times given the Reserve Bank of Australia (RBA) is expecting a gradual lift in wage pressures to help boost economic growth and inflation in the years ahead.

Economists expect wages to grow 0.7% for the quarter, leaving the annual increase at 2.2%. This 10-second guide has more on what to look out for.

Regionally, Japan will release preliminary Q3 GDP data at 10.50am AEDT. GDP is tipped to expand 0.3%, seeing the seasonally adjusted annual rate slow to 1.3% from 2.5% in the previous quarter.

Later in the session, all attention will then switch to the release of US CPI and retail sales figures for October.

Headline CPI is tipped to grow by 0.1%, down from 0.5% in September, seeing the annual increase slow from 2.2% to 2.0%. Core CPI, excluding energy and food prices, is expected to lift 0.2% over the month, leaving the annual rate unchanged at 1.7%.

“Given how well priced a Fed December hike is at the moment (90%), we suspect that we probably will need to see a [core] number sub-1.6% in order for the USD to get hurt,” says Rodrigo Catril, currency strategist at the National Australia Bank.

Retail sales are forecast to come in flat after a 1.6% surge in September, thanks largely to a reversal in gasoline prices. Excluding autos, sales are tipped to rise by 0.2%. The retail control group, influential on household consumption in US GDP, is expected to lift 0.4%, unchanged from a month earlier.

Both reports will arrive at 12.30am AEDT Thursday morning.

Outside of those headline-grabbers, markets will also receive the Empire State manufacturing index from the US along with unemployment data in the UK.

There’s also a smattering of central bank speeches scheduled, including Luci Ellis of the RBA.

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