The Australian dollar has gone from the doghouse to the penthouse

Rich Polk/Getty Images for Sony Pictures Entertainment
  • The Australian dollar rebounded strongly on Thursday, recovering much of the ground lost a session earlier.
  • Gyrations in the Chinese yuan remain a major influence over movements in the AUD/USD.
  • That will likely remain the case on Friday, especially with Chinese trade data also released during the session.

The Australian dollar went from the doghouse to penthouse on Thursday, mirroring the Jekyll and Hyde-like shift in investor risk appetite seen over the past 48 hours.

Here’s the scoreboard as at 7am in Sydney.

AUD/USD 0.7407 , 0.0042 , 0.57%
AUD/JPY 83.35 , 0.85 , 1.03%
AUD/CNH 4.9571 , 0.0056 , 0.11%
AUD/EUR 0.6346 , 0.0038 , 0.60%
AUD/GBP 0.5608 , 0.0031 , 0.56%
AUD/NZD 1.0926 , 0.0028 , 0.26%
AUD/CAD 0.974 , 0.0015 , 0.15%

After being the worst performing G10 currency on Wednesday, the Aussie took out the title of being the best performing major currency on Thursday, recovering much of the ground lost a session earlier as risk appetite improved.

Stock and commodities rose strongly while volatility fell — the exact opposite outcome to that seen on Wednesday.

The offshore traded Chinese yuan also strengthened, maintaining its vice-like grip over the Aussie that has become a feature of recent trade.

“The failure of USD/CNH to hold gains up though 6.70, and firmer Asia emerging market currencies in general, allowed the AUD/USD to creep back onto a 0.74 handle,” said Ray Attrill, Head of FX Strategy at the National Australia Bank.

Investing.comAUD/USD Hourly Chart

At the margin, the Aussie was also supported by a slightly softer-than-expected headline US CPI increase in June, lifting 0.1% compared to forecasts for a larger gain of 0.2%.

Turning to the day ahead, movements in Chinese financial markets, especially the yuan, will likely continue to drive those in the Aussie.

The only major data release in Asia also comes from China with international trade figures for June set to be released sometime after 1pm AEST. There is no set time for the release, much to the frustration of many in financial markets.

Outside of that event, there’s little in the way of market-moving events scheduled across the region.

Later in the session, data highlights include German wholesale price inflation, Spanish CPI along with trade prices and the latest University of Michigan consumer sentiment report from the US.

The US Fed will also release it’s semi-annual monetary policy report to Congress.

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