The Aussie dollar rally has stalled

Mark Thompson/Getty Images
  • The Australian dollar rally paused on Wednesday. It had rallied 6% against the US dollar in the previous two sessions.
  • The US dollar regained some ground after falling to multi-month lows on Monday. The euro was weighed down by continued weak economic data in German, raising concern about the Eurozone’s largest economy potentially falling into recession.
  • It’s a busy data calendar today. Australia will receive two reports on it’s largest sectors. Trade talks between US and China will continue.

Having surged 6% in just two days against the greenback, the Australian dollar rally took a breather on Tuesday.

Here’s the scoreboard at 7.55am in Sydney on Wednesday.

AUD/USD 0.7138 , -0.0009 , -0.13%
AUD/JPY 77.65 , -0.04 , -0.05%
AUD/CNH 4.8917 , -0.0004 , -0.01%
AUD/EUR 0.6240 , 0.0013 , 0.21%
AUD/GBP 0.5611 , 0.002 , 0.36%
AUD/NZD 1.0609 , 0.003 , 0.28%
AUD/CAD 0.9477 , -0.0028 , -0.29%

After opening the day at .7147, the AUD/USD traded in a thin range during the session, oscillating between .7117 and Monday’s high of .7150 throughout.

In complete contrast to what was seen on Monday, the US dollar was among the top performers for the session, rebounding after falling to a multi-month low 24 hours earlier.

The strength in the greenback was largely driven by weakness in the euro, sparked by another ugly economic report from Germany that increased concern that the Eurozone’s largest economy could fall into recession having already contracted in Q3.

While the Aussie softened against the US dollar, ongoing optimism towards trade negotiations between the US and China helped it gain against most of the major crosses.

Having originally been scheduled to last two days, trade negotiations between the two sides have been extended into a third day today.

Strong gains in iron ore and crude oil price also helped the Aussie’s cause during the session.

Investing.comAUD/USD Hourly Chart

Turning to the day ahead, Sino-US trade talks look set to dominate once again despite a busy data calendar.

In Australia, the Ai Group will release its Performance of Services Index for December at 8.30am AEDT. That will be followed by building approvals data for November at at 11.30am AEDT.

Given the sheer size, and therefore importance, of these sectors to the Australian economy, both carry the potential to be market moving, particularly with financial markets pricing in a two-in-three chance of a RBA rate cut by 2020.

Outside of Australia, other notable releases include labour cash earnings in Japan, German international trade and Eurozone unemployment.

The central bank calendar will be arguably more influential on markets today with the minutes from the US Federal Reserve’s December monetary policy meeting, along with speeches from FOMC members Bostic, Evans and Rosengren, all scheduled.

The Bank of Canada will also announce its January monetary policy decision — no movement is either likely or expected — while Bank of England Governor Mark Carney will also be in action.

US President Donald Trump is also expected to deliver TV address on border security matters from 1pm AEDT.

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