It was getting ugly for the Aussie dollar until Donald Trump came to the rescue

Frazer Harrison/Getty Images
  • The Australian dollar’s been on rollercoaster ride over the past 24 hours, trading in a massive 1.63% range against the greenback.
  • The Aussie dollar was under pressure until Donald Trump indicated that he was “not thrilled” by recent rate hikes from the US Federal Reserve.
  • The data calendar is quiet in Asia, pointing to the likelihood that gyrations in the Chinese yuan will prove influential on broader movements across currency markets.

The Australian dollar’s been on rollercoaster ride over the past 24 hours, soaring, then plunging, before attempting to climb again.

The combination of a strong Australian jobs report for June, another shellacking for the Chinese yuan and comments from US President Donald Trump ensured an interesting and opportunity-filled session for traders.

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

AUD/USD 0.7354 , -0.0043 , -0.58%
AUD/JPY 82.72 , -0.76 , -0.91%
AUD/CNH 4.9936 , 0.0053 , 0.11%
AUD/EUR 0.6315 , -0.004 , -0.63%
AUD/GBP 0.5650 , -0.0008 , -0.14%
AUD/NZD 1.0908 , 0.0024 , 0.22%
AUD/CAD 0.9752 , 0.0016 , 0.16%

After surging higher on the back of a stellar Australian jobs report for June, the AUD/USD reversed those gains, and more, in early European trade, succumbing to a renewed bout of investor risk aversion sparked by another sharp selloff in the Chinese yuan, sending it skidding to a more than one-year low against the US dollar.

The weakness in the yuan saw risk assets such as stocks and commodities weaken, dragging the AUD/USD to as low as .7320 at one point during the session.

However, just when it looked like the Aussie was going to tumble below the 72 cent level to fresh multi-year lows, Donald Trump stepped in, delivering a broadside to the US Federal Reserve in an interview conducted with CNBC.

“I don’t like all of this work that we’re putting into the economy and then I see rates going up,” Trump said.

He said he was “not thrilled” about recent Fed rate hikes, although he acknowledged the he was letting the Fed “do what they feel is best.”

The remarks had an instant impact, pushing down US bond yields to the detriment of the US dollar and stocks. They also helped the AUD/USD recover some of the losses seen earlier in the session.

In the end, the AUD/USD traded in a massive trading range of 121 pips, or 1.63%, finishing the session at .7358.

Investing.comAUD/USD Hourly Chart

Turning to the session ahead, it would be a brave soul to predict anything other than Chinese markets, particularly the yuan, dictating broader movements in Asian trade.

There is a smattering of economic data released — including Japanese CPI and New Zealand migration figures — but they’re likely to play second fiddle to the movements in the yuan.

Later in the day, data highlights include German producer price inflation, Eurozone current account, UK public sector borrowing along with retail sales and consumer price inflation from Canada.

The latter two releases will be the headline acts.

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