The Australian dollar is pushing higher as risk appetite improves

Hannah Peters/Getty ImagesHannah Peters/Getty Images
  • The Australian dollar rose across the board on Tuesday, helped by an improvement in investor risk appetite.
  • Being the start of the month, there is a busy economic calendar on the way today.
  • The US Fed will announce its August monetary policy decision at 4am AEST. No change in rates is expected or likely.

The Australian dollar rose across the board on Tuesday, finding support from mixed Australian economic data, renewed optimism towards trade negotiations between China and the US as well as few signs the Bank of Japan will dial down its ultra-loose monetary policy settings anytime soon.

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

AUD/USD 0.7427 , 0.0023 , 0.31%
AUD/JPY 83.06 , 0.83 , 1.01%
AUD/CNH 5.0520 , -0.002 , -0.04%
AUD/EUR 0.6351 , 0.0027 , 0.43%
AUD/GBP 0.5658 , 0.0022 , 0.39%
AUD/NZD 1.0892 , 0.0044 , 0.41%
AUD/CAD 0.9667 , 0.0013 , 0.13%

Most of the Aussie’s gains occurred in the Asian session, helped by a strong Australian building approvals report for June, an improvement in investor risk appetite following the release of the Bank of Japan’s July monetary policy decision as well a sharp deterioration in New Zealand business confidence, seeing traders switch out of the Kiwi into the Aussie.

Traders largely overlooked a weak batch of China PMI reports for July as well as soft Australian private sector credit growth in June.

The Aussie remained well supported in European and North American trade, helped by reports that trade negotiations between the US and China may soon resume again.

That sparked a sharp rally in the offshore traded yuan, helping to underpin the Aussie’s earlier gains.

There was little market reaction to the release of major European and US economic data during the session.

Investing.comAUD/USD Hourly Chart

Turning to the session ahead, it will be another busy one for traders as the start of the new month heralds the release of umpteen major economic data releases around the globe.

In Australia, markets will receive manufacturing PMI data for July from the Ai Group at 8.30am AEST. That will be followed by CoreLogic’s monthly Home Value Index at 10am AEST. A decline of around 0.5% is expected.

The RBA will also release its monthly commodity price index at 4.30pm AEST.

Outside of Australia, New Zealand unemployment data for the June quarter will arrive at 8.45am AEST.

Later in the session, a plethora of manufacturing PMI reports will be released in China, Japan, Europe and North America.

US ADP private sector employment — a lead indicator before Friday’s US payrolls report — as well as US construction spending data are the other major highlights.

The US Federal Reserve will also release its August monetary policy decision at 4am AEST. No change in rates is expected and few expect any real surprises will be found in the accompanying monetary policy statement.

It will likely convey the view that a gradual tightening in policy in the period ahead is still warranted.

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