The Australian dollar is going nowhere fast

ChinaFotoPress/Getty Images
  • The Australian dollar ambled its way through Wednesday’s session with US markets on holiday.
  • The AUD/USD has largely mirrored the movements in the Chinese yuan this week.
  • That’s likely to continue in Asian trade today, although there are some big data and central bank releases later in the session.

The Australian dollar ambled its way through Wednesday’s trading session, lifting modestly in Asia before giving back those gains in Europe.

As has been the case throughout the week, it continues to be highly influenced by the gyrations in the Chinese yuan, especially with lower-than-normal volumes with US markets on holiday.

Here’s the scoreboard at 7am in Sydney.

AUD/USD 0.7380 , -0.0005 , -0.07%
AUD/JPY 81.54 , -0.12 , -0.15%
AUD/CNH 4.9011 , -0.0206 , -0.42%
AUD/EUR 0.6330 , -0.0004 , -0.06%
AUD/GBP 0.5576 , -0.0021 , -0.38%
AUD/NZD 1.0906 , -0.0023 , -0.21%
AUD/CAD 0.9702 , 0.0002 , 0.02%

Despite the release of Australian retail sales and trade data during the session, the Aussie continued to take its cues from movements in the Chinese yuan.

“Conflicting reports about China’s intentions with regard to the currency have circulated in the last 36 hours,” said Ray Attrill, head of FX Strategy at the National Australia Bank.

“After Tuesday’s comments directly sourced to PBoC Governor Yi Gang that the currency would henceforth be maintained at a ‘stable’ and ‘balanced’ level, a Reuters report overnight, based on talks with insiders, said that ‘China is comfortable with a weakening yuan, intervening only to prevent any rapid and destabilising declines or to restore market confidence’.”

Investing.comAUD/USD Hourly Chart

With little on the data docket in Asia, movements in the Aussie are once again likely to be dictated by those in Chinese financial markets, especially the yuan.

“In our part of the world, the sound of the clock ticking down to the 6th July deadline for the imposition of tariffs by both the US and China on $34 billion of each country’s imports from one another gets louder,” Attrill said.

Chinese markets will resume trade between 11am to 11.30am AEST.

Later in the session, data highlights include German Factory orders along with jobless claims, ADP private sector employment and non-manufacturing PMI from the United States.

The US Fed will also release the minutes of its June FOMC meeting.

That, along with the non-manufacturing PMI report, appear most likely to generate a reaction in financial markets.

However, any developments on the trade front will likely override any data or central bank releases today.

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