The Australian dollar weakened on Monday, succumbing to a bout of broad-based US dollar strength during the session.
And as seen in the scoreboard below, it also lost ground against most of the major crosses.
AUD/USD 0.7842 , -0.002 , -0.25%
AUD/JPY 88.66 , -0.09 , -0.10%
AUD/CNH 5.0946 , 0.0111 , 0.22%
AUD/EUR 0.6552 , 0.0028 , 0.43%
AUD/GBP 0.5780 , -0.0002 , -0.03%
AUD/NZD 1.0920 , -0.0029 , -0.26%
AUD/CAD 0.9737 , -0.0017 , -0.17%
“[The] USD recovered against most major currencies overnight,” said Elias Haddad, senior currency strategist at the Commonwealth Bank. “The lift in the USD appears to be driven by oversold technical conditions.”
The bounce in the US dollar weighed on the Aussie which, along with a further widening in the spread between US and Australian 2-year interest rate swaps, managed to offset a strong lift in Chinese iron ore futures during the session, Haddad said.
Against the crosses, the Aussie only managed to make significant ground against the euro, an outcome that was driven by profit-taking in the common currency after it failed to break above key resistance in recent trade.
“Interest rate markets seems to be at the helm and driving this move lower and mostly taking some of the sentiment from last Fridays miss to European core CPI,” said Chris Weston, chief market strategist at IG Markets.
The inability of the EUR/USD to break above the September 8 high of 1.2092 in recent days may have also prompted profit-taking among traders.
Turning to the session ahead, there’s a smattering of economic data released today both at home and abroad.
In Australia, markets will receive Australian building approvals data for November at 11.30am AEDT. Markets are looking for a decline of 1.0% for the month, largely reversing a 0.9% increase in October.
Released alongside the approvals report, ANZ Bank’s job ads survey for December will also arrive at 11.30am AEDT.
Neither the approvals of job ads reports will likely shift the Aussie by any significant margin.
Outside of Australia, traders will receive Japanese consumer confidence, German industrial output and trade, Eurozone unemployment along with NFIB Small Business Confidence and JOLTS Job survey from the US.
On the Fed front, Eric Rosengren, Boston Fed president, will speak at the Brookings Institution while Neel Kashkari, Minneapolis Fed president, will appear on a panel in Minnesota. Both are non-voters on the FOMC in 2018.