The Australian dollar pushed higher to start the week, gaining ground on the back of firmer stocks and commodity prices.
You could add a lack of market moving news and positioning tweaks ahead of major central bank and economic releases later in the week to explain the Aussie’s move.
Here’s the scoreboard as at 8am AEDT.
AUD/USD 0.7528 , 0.0024 , 0.32%
AUD/JPY 85.47 , 0.28 , 0.33%
AUD/CNH 4.9841 , 0.012 , 0.24%
AUD/EUR 0.6394 , 0.0015 , 0.24%
AUD/GBP 0.5644 , 0.0039 , 0.70%
AUD/NZD 1.0890 , -0.0061 , -0.56%
AUD/CAD 0.9674 , 0.0031 , 0.32%
After opening the session buying .7504, the AUD/USD pushed higher in Asian and European trade, eventually hitting a high of .7544 before easing towards the close.
Greg McKenna, Chief Market Strategist at AxiTrader, said there was no one catalyst to explain the Aussie’s push higher.
“What a messy world forex trading is at the moment,” he said in his morning note.
“That means there are plenty of opportunities but there is no overarching narrative at the moment as each pair maps out its own course.”
Mckenna says that despite widespread optimism about the outlook for the US economy, something that contributed to a rally in US stocks on Monday after briefly dipping following news of a suspected failed terrorist attack in New York City, currency traders remain reluctant to push the US dollar higher.
“The USD can hardly take a trick at the moment,” he says.
“In some ways that is the narrative. While US stocks just keep powering on the USD is not feeling the love for a strong economy, positive outlook, and growing sense that the fed may need to either increase the number or pace of rate hikes in 2018.”
According to data released by the US Commodity Futures Trading Commission (CFTC) last Friday, traders trimmed US dollar longs for a third consecutive week in early December, hinting that there is now a growing sense of unease as to whether the greenback rally can continue.
A lack of wage pressures in last Friday’s November US non-farm payrolls report may have contributed to the US dollar’s lacklustre performance during the session.
The Aussie also managed to rally against all major crosses except the New Zealand dollar with the Kiwi benefiting from news that Adrian Orr will take over as Reserve Bank of New Zealand Governor in March next year.
“The lack of overarching narrative can then throw up some strange moves as we saw with the Kiwi yesterday,” says McKenna. “The announcement of Adrian Orr as the RBNZ governor seemed to ignite a rally in NZDUSD.”
In contrast, the Aussie gained substantial ground against the UK pound — again on renewed concern about the outlook for trade negotiations as part of the Brexit deal.
Turning to the session ahead, the economic events calendar heats up today with major data released both in Australia and abroad.
Domestically, the weekly ANZ-Roy Morgan consumer confidence report will be released at 9.30am AEST. That will be followed two hours later by the National Australia Bank’s Australian Business Confidence report for November along with lending finance and house price data from the ABS.
Of all those releases, the NAB survey appears most likely to generate a reaction in the Aussie. With stronger business investment and employment growth now baked into market pricing, the risk today is for a report that questions that narrative.
Put another way, the Aussie is more likely to be sensitive to a soft report rather than a continuation of recent themes.
Outside of Australia, data highlights include German investor confidence, UK CPI along with PPI and NFIB Small Business Optimism in the United States.
Of all those releases, the UK CPI appears most likely to generate some volatility, especially in the UK pound.