The Australian dollar has opened the new week trading mixed, holding steady against the greenback but strengthening against the major crosses.
Here’s the scoreboard as at 7.45am AEDT.
AUD/USD 0.7819 , 0.0001 , 0.01%
AUD/JPY 89.03 , 0.28 , 0.32%
AUD/CNH 5.1781 , 0.0073 , 0.14%
AUD/EUR 0.6645 , 0.0013 , 0.20%
AUD/GBP 0.5929 , 0.001 , 0.17%
AUD/NZD 1.1244 , 0.0058 , 0.52%
AUD/CAD 0.9874 , 0.0009 , 0.09%
After opening Friday’s session buying .7875, the AUD/USD fell heavily on Friday with the US dollar rallying hard on renewed speculation of US tax reform and new leadership at the US Federal Reserve.
“[The] USD and US 10-year Treasury yields rose by about 7 basis points to near a four month high of 2.39% supported by favourable progress on US tax reform,” said Elias Haddad, senior currency strategist at the Commonwealth Bank.
Speculation that Donald Trump may replace current Fed Chair Janet Yellen with another candidate also boosted the US dollar, placing further downside pressure on the Aussie.
We may find out more information on the likely makeup of the Fed’s leadership next year with Fox News to air an interview with Trump on Sunday evening in the US.
As seen in the AUD/USD hourly chart below, there were two waves of selling seen during Friday’s session, coinciding with news on tax reform and the Fed leadership.
While the Aussie fell against the US dollar, it performed strongly against the crosses, especially the New Zealand and Canadian dollars, along with the Japanese yen.
The Kiwi was undermined by ongoing political uncertainty, while its Canadian counterpart fell heavily following the release of weak inflation data on Friday evening, scuppering expectations for another near-term rate hike from the Bank of Canada.
The yen has also weakened following Sunday’s general election which delivered incumbent Prime Minister Shinso Abe another dominant victory.
“Japanese Prime Minister Shinzo Abe’s Liberal Democratic Party led (LDP) coalition has won a two thirds parliamentary ‘super majority’ that gives him a fresh mandate to continue with fiscal expansion, monetary easing and structural reforms,” says Haddad.
Turning to the session ahead, there’s few events that appear likely to generate much activity across currency markets, including in the Aussie.
There’s no domestic data scheduled with Chinese new home prices for September the only release of note across the broader Asian region.
That pattern continues into European and North American trade with Eurozone consumer confidence, UK CBI industrial trends survey and Chicago Fed National Activity Index from the US the only releases of note.