The Australian dollar is almost back to 80 cents

Star Wars Episode IV/ Lucasfilm/Twentieth Century Fox. Source: IMDB

The Australian dollar is quickly closing in on the 80 cent level, boosted yet again on Monday by broad-based US dollar weakness.

Here’s the scoreboard as at 8am AEDT.

AUD/USD 0.7969 , 0.0057 , 0.72%
AUD/JPY 88.06 , 0.28 , 0.32%
AUD/CNH 5.1228 , 0.0169 , 0.33%
AUD/EUR 0.6494 , 0.0012 , 0.19%
AUD/GBP 0.5774 , 0.0017 , 0.30%
AUD/NZD 1.0913 , 0.0008 , 0.07%
AUD/CAD 0.9896 , 0.0037 , 0.38%

According to Greg McKenna, Chief Market Strategist at AxiTrader, US dollar selling during Monday’s session was “broad-based and relentless”.

“The Euro is now closing in on 1.23 sitting at 1.2270 this morning. Sterling is above 1.38 for the first time since Brexit, and the Yen rallied hard and is at 110.46 this morning,” McKenna said in his morning note.

“Commodity bloc currencies are stronger with the Aussie and Kiwi up around 0.75% to 0.7970 and 0.7305 respectively.”

Along with thin market conditions due to the Martin Luther King Jr Holiday in the US, McKenna said the latest bout of US dollar weakness coincided with hawkish remarks from Ardo Hansson, a member of the European Central Bank’s governing council.

“Hannson said QE could end abruptly in September,” he says.

“That and another big EU trade surplus for November, along with an upgrade to the growth outlook for the region, continue to drive sentiment the ECB is on track to change tack.”

The strength in the euro took its toll on the US dollar index, or DXY, which fell by a further 0.6% on Monday, leaving it sitting at the lowest level since early January 2015.

That in turn helped to boost the AUD/USD which rose to as high as .7978 during the session, the highest level since September 22.

The AUD/USD has now gained 6.3% in a little over a month.

AUD/USD Daily Chart

As for whether the Aussie’s rally can continue today, like Monday, it will likely be determined by sentiment and technicals rather than upcoming economic data.

To be frank, there’s very little market-moving events scheduled for Tuesday.

Australia will receive new car sales data while New Zealand business confidence and Japanese producer price inflation will also be released.

Later in the session, highlights include inflation readings from the UK and Germany along with the Empire State manufacturing index from the United States.

For the New Zealand dollar traders out there, the latest GDT dairy auction will also take place.

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