Having tried and failed on several occasions to consolidate above the 72 cent level this week, the Australian dollar was hit hard overnight, falling heavily on the back of hawkish remarks from Fed Chair Janet Yellen and a strong US non-manufacturing PMI report for October in the US.
After rising to as high as .7217 in early European trade, presumably on the back of the questionable rally in Chinese stocks that soared more than 4% based on 5-month old remarks from the PBOC governor, the AUD/USD fell steadily throughout the overnight session, eventually plumbing a low of .7137 before bouncing modestly into the close.
“Markets took their cue from Fed Chair Janet Yellen overnight, testifying before the US House Financial Services Committee on bank regulation,” wrote NAB senior economist David de Garis in his morning note.
“In the Q&A session she confirmed that a Fed move in December is a ‘live’ possibility, providing that the economic data hold up. This saw markets move to price in a high probability of a December move, increasing the chances from 50% up to 60% towards the end of New York session, the big dollar appreciating as a result. She told the committee that ‘moving in a timely manner, if the data and the outlook justify move, is the prudent thing to do’.”
“Big dollar strength was broad-based, underperformers being the oil currencies from lower oil prices.”
As at 8.35am AEDT, the AUD/USD currently buys .7153, below Wednesday’s opening level of .7183.
Looking ahead to today’s Asian session, central bank-speak from the RBA and US Fed looks set to dominate.
Governor Glenn Stevens speaks at 9.25am AEDT in Melbourne, while deputy Philip Lowe, will follow soon after at 1.10pm AEDT.
With the RBA board meeting out of the way, (Stevens) will be widely expected to deliver the RBA’s latest thinking on the economy and forecasts and ahead of tomorrow’s quarterly Statement on Monetary Policy,” notes de Garis.
“The Q&A if not the speech should open up plenty of such opportunity for market interest.”
Sandwiched between the Stevens and Lowe speeches will be an address by US Fed vice-chair Stanley Fischer to the national economists club in Washington at 11.30am AEDT. Given the hawkish remarks from Yellen overnight, Fischer’s speech also has the potential to be influential movements on the US dollar, hence the Aussie.
Here’s the current Australian dollar scoreboard.
- AUD/USD 0.7153 , -0.0032 , -0.45%
- AUD/JPY 86.93 , -0.04 , -0.05%
- AUD/CNY 4.5326 , -0.0196 , -0.43%
- AUD/EUR 0.6583 , 0.0032 , 0.49%
- AUD/GBP 0.4649 , -0.0009 , -0.19%
- AUD/NZD 1.0843 , 0.0068 , 0.63%
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