The Aussie dollar ripped higher overnight, jumping above the 80 cent level for the first time in four months.
However, after hitting a high of .8022, the AUD/USD is now just below the 80 cent level.
Here’s the scoreboard as at 7.45am AEDT.
AUD/USD 0.7997 , 0.0037 , 0.46%
AUD/JPY 88.9 , 0.99 , 1.13%
AUD/CNH 5.1395 , 0.0158 , 0.31%
AUD/EUR 0.6544 , 0.0052 , 0.80%
AUD/GBP 0.5769 , -0.0002 , -0.03%
AUD/NZD 1.0959 , 0.0008 , 0.07%
AUD/CAD 0.9938 , 0.0041 , 0.41%
As the scoreboard reveals, the Aussie put in a strong performance against all majors except the British pound and New Zealand dollar.
As for the reason behind that strong performance, the simple truth is there was no definitive answer.
Greg McKenna, Chief Market Strategist at AxiTrader, put the Aussie’s gains down to renewed strength in US stocks.
“US stocks are surging again and that lift in investor risk appetite seems to be helping the Australian and Kiwi dollars which usually do well when risk appetite is on the rise,” he said in his morning note.
However, as rightfully points out, the commodity-linked Aussie still rallied despite a poor session for base and bulk metals prices.
“Copper has lost about 0.9% on what’s been a poor day for base metals with red across the board,” says Mckenna, adding “that’s curious given the commodity currency moves.”
As seen in the 5-minute chart below, the AUD/USD really started to take off following the Bank of Canada’s decision to lift interest rates at its January policy meeting.
While the decision was widely expected by financial markets, the increase may have reminded traders of other central banks that are yet to begin normalising monetary policy.
Propelled by stop-loss buying above the 80 cent level, the AUD/USD eventually topped out at.8022, the highest level since September 21 last year.
As for what direction the Aussie will head in the session ahead, it will likely be determined by the release of Australia’s December jobs report at 11.30am AEDT.
Markets are looking for an increase in employment of 15,000, leaving the unemployment rate steady at 5.4%.
“If [the] data prints well above expectations, which we see as a distinct risk, then last September’s 0.8125 high will come quickly into focus, probably alongside rising confidence the RBA will be lifting rates in the second half of the year,” said Ray Attrill, Head of FX Strategy at the National Australia Bank.
Attrill is looking for an increase in employment of 35,000. If an increase is recorded, at 15, it will equal the longest stretch of consecutive monthly job gains on record.
This 10-second guide has more information on what to look out for in the report.
Outside of the Australian jobs report, the other big event will come from China with the release of a swathe major data releases, headlined by Q4 GDP.
While no one doubts the importance of the Chinese economy, it’s data stopped being market moving many years ago, undermined by scepticism over the figures being presented.
For those still with an interest, GDP is expected to increase by 6.7% from a year earlier, down from 6.8% in the September quarter. If recent history is any guide, it will either match or beat consensus by 0.1 percentage point.
It will arrive at 6pm AEDT.
Coming before the GDP report, monthly data on industrial output, urban fixed asset investment and retail sales will also be released at 3.30pm AEDT
From a year earlier, growth rates of 6%, 7.1% and 10.1% are expected.
Later in the session, data highlights include building permits, housing starts, jobless claims and Philadelphia Fed manufacturing index from the US.