The Australian dollar is treading water as China's currency stabilises

Phil Walter/Getty Images
  • The Australian dollar was quiet on Wednesday, finishing mixed against the major crosses.
  • Australian economic data released during the session was weak and trade tensions between China and the United States flared again, but markets largely ignored it.
  • The Aussie’s movements were largely reflective of those in the Chinese yuan.
  • Aside from trade headlines, most investor attention today will be on the release of PMI reports in Europe and the United States.

The Australian dollar ambled its way through Wednesday’s trading session without really going anywhere, largely reflecting the performance of most other major asset classes.

There’s the scoreboard at 7am in Sydney on Thursday.

AUD/USD 0.6880 , -0.0003 , -0.04%
AUD/JPY 75.92 , -0.13 , -0.17%
AUD/CNH 4.7713 , -0.0005 , -0.01%
AUD/EUR 0.6169 , 0.0003 , 0.05%
AUD/GBP 0.5434 , 0.0018 , 0.33%
AUD/NZD 1.0590 , 0.0019 , 0.18%
AUD/CAD 0.9245 , 0.0018 , 0.20%

With the exception of the British pound, the Aussie recorded small movements across all other major crosses, ignoring the release of weak Australian job ads and construction data and a further escalation in trade tensions between the United States and China.

Instead, the Aussie largely mirrored the performance of the offshore traded yuan, or CNH, weakening when it did and strengthening when it increased.

There was no reaction to the release of the minutes of the US Federal Reserve’s May FOMC meeting with the message very much the same as that communicated in the past: rates are unlikely to move in either direction for quite some time.

Investing.comAUD/USD Hourly Chart

Against the cross, the British pound was undermined by renewed political turmoil surrounding Brexit negotiations. The Canadian dollar was also under pressure following a steep decline in crude oil prices.

The Aussie lost modest ground against the Japanese yen, reflecting the cautious tone among investors seen during the session.

Turning to the day ahead, most attention, outside of ongoing trade headlines, will be on the release of manufacturing and services flash PMI reports from the United States, Eurozone, Germany, France, Japan and even Australia.

Given the sluggish start to the year for the global economy, investors will look to these reports to see whether that trend continued or eased in May.

Aside from from the PMI deluge, updated Q1 GDP figures from Germany will be released as will UK retail sales for April. In the United States, jobless claims and new home sales are the main highlights for the session.

It will also be a busy day for US Federal Reserve FOMC members with speeches from Robert Kaplan, Raphael Bostic and Mary Daly scheduled.

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