The Australian dollar continues to tango with the 80 cent level

Julian Finney/Getty Images

The Australian dollar continues to tango with the 80 cent level in early Asian trade on Friday, trying and failing on three separate occasions over the past 24 hours to bust convincingly above this level.

Here’s the scoreboard as at 7.55am AEDT.

AUD/USD 0.7995 , 0.0026 , 0.33%
AUD/JPY 88.79 , 0.14 , 0.16%
AUD/CNH 5.1331 , 0.0078 , 0.15%
AUD/EUR 0.6533 , -0.0005 , -0.08%
AUD/GBP 0.5756 , -0.0006 , -0.10%
AUD/NZD 1.0937 , -0.0016 , -0.15%
AUD/CAD 0.9925 , 0.0015 , 0.15%

After opening the session at .7969, the AUD/USD fell following the release of Australia’s December jobs report with traders more focused on a lift in unemployment rather than another strong increase in employment.

However, those losses were completely unwound later in the session following a string of economic data beats delivered by China.

GDP grew by 6.8% in Q4 from a year earlier, above the 6.7% level eyed by economists. It was the 12th consecutive GDP report where the figure was either in line or beat market expectations by 0.1 percentage point.

Other readings on industrial output and urban fixed asset investment also beat to the topside.

The Aussie rallied following the release of the Chinese data, eventually hitting a high of .8006 before being hammered back below the 80 cent level once again.

Along with a strong performance from its largest trading partner, the Aussie was also helped by continued US dollar weakness, this time on the looming prospect of a US government shutdown beginning this weekend.

“At the time of writing we still await a vote on a stop-gap spending bill, with a tweet by Trump last night adding to the difficulty in getting agreement,” said Jason Wong, Senior Markets Strategist at BNZ in Wellington.

“We’ve been down this road many times before, with noise about the US government shutting down and possibility of defaulting on an interest payment, but the end result has always been a kicking of the can down the road and no default event.”

That’s ensuring the AUD/USD is not straying too far away from the 80 cent level at present.

AUD/USD 5-Minute Chart

Turning to the day ahead, it will likely be developments in Washington, rather than the economic data calendar, that will dictate the Aussie’s direction.

There’s no major market moving events scheduled in Asia and only a smattering scheduled in Europe and North America.

Data highlights include UK retail sales, eurozone current account, German producer price inflation and the preliminary reading of the University of Michigan’s US consumer confidence survey for January.

Given the relatively light data calendar, Richard Franulovich, Head of FX Strategy at Westpac, says that most eyes today will be on Washington.

“House Speaker Paul Ryan said he is confident the House will pass the stopgap measure but many Republicans are opposed to adding provisions to a funding bill that extends a children’s health program and gives protections to immigrants who entered the US illegally as children,” he says.

“The House votes US Thursday evening with the Senate to follow [with] 60 votes needed.

“Without a deal the US government will have a partial shutdown from Friday midnight.”

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