Another Australian dollar rally has fizzled out

Lloyd Bishop / NBC / NBCU Photo Bank via Getty ImagesSelling rallies.
  • The Australian dollar remains stuck in a thin trading range and is showing few signs of breaking out.
  • It was hit hard on Thursday, giving back all of the gains achieved a session earlier.
  • The US dollar strengthened as US economic data topped market expectations.
  • Chinese trade data for March will be the headline economic act on Friday. The US corporate earnings calendar also begins to ramp up.

The Australian dollar rally fizzled out on Thursday with the currency giving back all the gains achieved a session earlier.

A rebound in the US dollar, along with weaker crude oil prices and caution ahead of major US corporate earnings reports, was the main factor behind the Aussie’s reversal.

Here’s the scoreboard at 7am in Sydney on Friday.

AUD/USD 0.7122 , -0.0048 , -0.67%
AUD/JPY 79.52 , -0.07 , -0.09%
AUD/CNH 4.7915 , -0.0252 , -0.52%
AUD/EUR 0.6327 , -0.0033 , -0.52%
AUD/GBP 0.5456 , -0.002 , -0.37%
AUD/NZD 1.0579 , -0.0015 , -0.14%
AUD/CAD 0.9531 , -0.0021 , -0.22%

After closing Wednesday’s session at the highest level in six weeks, the AUD/USD gradually lost ground in Asian trade, largely mirroring weakness in Chinese stocks and yuan during the session.

Those losses were extended in early North American trade following the release of stronger-than-expected US economic data.

Weekly jobless claims fell to a 50-year low while producer price inflation rose by 0.6% in March, double the increase expected. The data coincided with a lift in US bond yields, helping to push the greenback higher against the major crosses.

Fedspeak during the session offered few meaningful surprises, with officials continuing to reinforce that while the US economy is performing well it’s not in any rush to adjust policy settings any either direction.

Strength in the greenback, speculation that OPEC may reduce output curbs when the cartel next meets in July, and weighed crude oil prices, all likely contributed to weakness in other commodity markets during the session.

The wash-up was that the AUD/USD fell to as low as .7118 before stabilising towards the close.

Investing.comAUD/USD Hourly Chart

The Aussie lost ground against all of the other major crosses, especially the euro and offshore traded yuan.

It also fell against the British pound despite an extension of Brexit deadline to October 31, a factor that will continue to create uncertainty for the UK economy.

Turning to the day ahead, it look set to be a fairly quiet session with only a handful of meaningful data releases scheduled.

In Asia, most interest will be on Chinese trade data for March, which will be released midway through the session. There is no set time for the release, unfortunately.

New Zealand migration and business PMI data will also arrive in early trade.

Later in the session, other highlights include Eurozone industrial production along with the University of Michigan consumer confidence survey for April and trade prices in the United States.

The US corporate earnings season also kicks off in earnest with J.P. Morgan and Wells Fargo both reporting before US stocks will open.

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