The Australian dollar is ambling along without really going anywhere

Steve Christo/Corbis via Getty Images

The Australian dollar is back testing the 78 cent level, continuing to benefit from a renewed bout of US dollar weakness.

Here’s the scoreboard as at 7.50am AEDT.

AUD/USD 0.7785 , 0.0009 , 0.12%
AUD/JPY 87.59 , 0.16 , 0.18%
AUD/CNH 5.1169 , 0.0109 , 0.21%
AUD/EUR 0.6561 , -0.0025 , -0.38%
AUD/GBP 0.5886 , -0.0002 , -0.03%
AUD/NZD 1.0986 , -0.0011 , -0.10%
AUD/CAD 0.9699 , -0.0028 , -0.29%

After failing to sustain a break above the 78 cent level during the Asian session, the AUD/USD is back testing that level this morning following the release of the US Federal Reserve’s FOMC September monetary policy meeting minutes.

Elias Haddad, senior currency strategist at the Commonwealth Bank, said that the minutes — at the margin — were perceived to be slightly dovish.

“The minutes indicates the FOMC remains in no rush to speed up the pace of Fed funds rate increases, meaning US interest rate expectations will not adjust higher,” he said in his morning note.

The minutes said that “many participants expressed concern that the low inflation readings this year might reflect not only transitory factors, but also the influence of developments that could prove more persistent, and it was noted that some patience in removing policy accommodation while assessing trends in inflation was warranted”.

Despite that caution, it went on to say that “many participants thought that another increase in the target range later this year was likely to be warranted”.

Haddad said the FOMC’s view that another rate hike this year was warranted helped to limit any significant damage for the US dollar.

“The minutes reinforce the case for a December Fed funds rate hike which is USD supportive,” he said.

The AUD/USD bounced immediately following the release, as seen in the 5-minute chart below.

AUD/USD 5-Minute Chart

Turning to the day ahead, it’s likely to be a rinse-and-repeat of what’s been seen earlier in the week: there’s no major data releases or events scheduled in Asia, likely ensuring that movements in the Chinese yuan and and commodity futures will go someway to determining where the Aussie will head next.

For those scratching around for something to look at, Australia will release housing finance data at 11.30am AEDT.

There’ll be plenty of interest on the investor housing finance figure, along with first home buyer activity, but it’s unlikely to cause much of a reaction in the markets.

Elsewhere in Asia the cupboard is bare in terms of market-moving events.

Later in the session, data highlights include French CPI, Eurozone industrial production, Canadian new home prices and weekly jobless claims and producer price inflation from the US.

On the central bank front, ECB President Mario Draghi, along with ECB Executive Board Member Peter Praet, are both scheduled to speak. On the Fed front, Lael Brainard and Jerome Powell will also be in action. Andy Haldane, Chief Economist at the Bank of England and voting MPC member, rounds off what will be a busy session for central bank speak.

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