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The Australian dollar remains under pressure

Jeff J Mitchell/Getty Images

The Australian dollar is drifting in early Asian trade on Monday, reflecting the impact of holidays in Australia and China.

Here’s the scoreboard as at 8.50am AEDT.

AUD/USD 0.7835 , 0.0002 , 0.03%
AUD/JPY 88.14 , -0.18 , -0.20%
AUD/CNH 5.2068 , -0.0027 , -0.05%
AUD/EUR 0.6635 , 0.0003 , 0.05%
AUD/GBP 0.5853 , -0.0005 , -0.09%
AUD/NZD 1.0862 , 0 , 0.00%
AUD/CAD 0.9776 , 0.001 , 0.10%

The AUD/USD is basically unchanged from Friday’s closing level, showing little reaction to Chinese PMI reports released over the weekend which revealed activity levels across the nation’s industrial and non-industrial sectors improved at the fastest pace in years during September.

Instead, economists at ANZ Bank said that markets were still digesting news that there may be a change in leadership at the US Federal Reserve, something that caused the US dollar and bond yields to spike on Friday evening.

“AUD dipped back below 0.7850 on Friday as the USD firmed on news of a possible hawkish Fed chair,” the bank wrote on Monday.

“The announcement that Kevin Warsh was interviewed drove a spike in US yields and USD given his previous hawkish tilt and distaste for quantitative easing.”

Warsh, a former Morgan Stanley banker and Federal Reserve Board Governor, met with Trump and US Treasury Secretary Steven Mnuchin on Thursday to discuss the potential appointment, according to a story that ran in The Wall Street Journal.

Janet Yellen’s current term as US Fed chair is scheduled to expire in February 2018.

Along with mixed economic data, that ensured that the AUD/USD ended the week under pressure.

AUD/USD Hourly Chart

With two major markets on holiday today, it looks set to be a quiet start to the trading week.

In Australia, the Ai Group’s latest manufacturing PMI survey will be released at 9.30am AEDT. CoreLogic’s monthly Home Value Index will follow 30 minutes after at 10am AEDT. Neither will generate a reaction in the Aussie.

Outside of Australia, markets will also receive manufacturing PMI and quarterly Tankan survey from Japan.

Later in the session, markets will also receive manufacturing PMI surveys from Europe, the UK and US, unemployment data from the Eurozone, along with construction spending from the United States.

Robert Kaplan, US FOMC member, is also scheduled to participate in a panel discussion later today.

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