The Australian dollar remains choppy and directionless

Reisig and Taylor/ABC via Getty ImagesLOST.
  • The Australian dollar remains choppy and directionless, falling modestly on Wednesday after rising slightly on Tuesday.
  • Its performance mirrored broader risk appetite as trade concerns flared again.
  • The economic calendar is quiet in Asia, likely ensuring the Aussie will continue to take its cues from the Chinese yuan.

The Australian dollar remains choppy and directionless, giving back ground against most of the major crosses on Wednesday after doing the exact opposite one day earlier.

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

AUD/USD 0.7405 , -0.0021 , -0.28%
AUD/JPY 82.73 , -0.34 , -0.41%
AUD/CNH 5.0549 , 0.0031 , 0.06%
AUD/EUR 0.6350 , -0.0001 , -0.02%
AUD/GBP 0.5640 , -0.0016 , -0.28%
AUD/NZD 1.0901 , 0.0012 , 0.11%
AUD/CAD 0.9623 , -0.004 , -0.41%

The Aussie’s performance mirrored the broader mood of the session as risk appetite soured on renewed concerns over trade negotiations between the United States and China.

Reports suggesting the US was considering upping proposed tariffs on $US200 billion worth of Chinese imports from 10% to 25% — now subsequently confirmed by the US Government — weighed on sentiment during the session, keeping all risk assets closely tied to China, including the Aussie dollar, under pressure.

As it has done now for several weeks, the AUD/USD largely tracked movements in the USD/CNH during the Asian session, paying scant attention to the swathe of manufacturing PMI reports released across the region.

Investing.comAUD/USD Hourly Chart

The Aussie remained under pressure in both European and US trade, showing little to no reaction to the economic data or the release of the US Federal Reserve’s August FOMC monetary policy decision.

As expected, the Fed left the funds rate steady in a range of 1.75% to 2% and signaled that it was likely that it will increase by 25 basis points when it next meets in September.

The one talking point was that the Fed upgraded its description of economic growth from “solid” to “strong”, fitting with the view that official interest rates are likely to rise further, and soon.

Turning to the day ahead, it will be a relatively quiet first half of the session with Australia’s trade report for June the only release of note. The trade surplus is expected to swell to $900 million, up marginally from $827 million in May.

This report will provide a rough guide as to the external contribution trade made to Australian Q2 GDP. It will be released at 11.30am AEST.

Later in the session, other data highlights include Eurozone producer prices as well as the Empire State manufacturing index, factory orders, revised durable goods orders and weekly jobless claims from the United States.

After being dominated by the Bank of Japan and US Fed earlier in the week, the Bank of England will take centre stage today with the bank widely expected to increase its bank rate by 25 basis points to 0.75%.

Given its over 90% priced, the supplementary commentary offered by the bank will likely dictate market direction.

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