The Australian dollar is still climbing

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  • The Australian dollar continues to climb, helped by strength in the Chinese yuan.
  • The USD/CNY fell to the weakest level in nearly six months on Friday, assisted by ongoing optimism towards US-Sino trade negotiations.
  • The Brisith pound is likely to remain volatile ahead of a key Brexit deal vote in the UK House of Commons on Tuesday.

The Australian dollar continues to climb, moving back above the 72 US cent level on Friday. It remains above this level in early trade on Monday.

Here’s the scoreboard at 7.55am AEDT.

AUD/USD 0.7213 , -0.0002 , -0.03%
AUD/JPY 78.27 , 0.10 , 0.13%
AUD/CNH 4.8748 , 0.008 , 0.16%
AUD/EUR 0.6297 , 0.0019 , 0.30%
AUD/GBP 0.5611 , 0.0007 , 0.12%
AUD/NZD 1.0561 , 0.0046 , 0.44%
AUD/CAD 0.9569 , 0.006 , 0.63%

As was the case on Thursday, the Aussie was helped by continued gains in the Chinese yuan which rose to fresh five-month highs against the greenback.

The latest burst of buying in the yuan coincided with news that China’s Vice Premier, Liu He, will be visit Washington later this month for further trade talks, helping to spur gains in any China-linked assets.

At the margin, lower US bond yields on Friday, along with a small beat in Australian retail sales in November and no sign of a resolution in the partial US government shutdown, may have helped the Aussie’s cause during the session, seeing the AUD/USD lift to as high as .7235 at one point, a level not seen since December 13.

The AUD/USD has now rallied 7% from the decade-low of .6743 struck in early January.

Investing.comAUD/USD 4-Hour Chart

The Aussie also gained ground against the euro, helped by further weak economic data from the eurozone, this time from Italy.

Despite weak economic data from the UK, the British pound was the standout performer on Friday, helped by ongoing speculation ahead of a key Brexit vote on Tuesday.

“Helping the pound higher was a report that UK Foreign Secretary Jeremy Hunt was warning Brexiteers that rejection of PM May’s Withdrawal Agreement this week could mean no Brexit and other reports that a request for an extension of the Article 50 deadline on March 29 was likely,” said Ray Attrill, Head of FX Strategy at the National Australia Bank.

Turning to the day ahead, the vice-like grip that Chinese financial markets have on the Aussie looks set to continue with the release of Chinese trade data for December arriving in the latter parts of the Asian session.

According to median economist forecasts, exports and imports are expected to grow 3% and 5% respectively in US dollar terms from a year earlier, seeing the trade surplus swell to $US51.53 billion.

Aside from the trade report the economic data calendar is quiet in Asia, likely meaning the movements in the Chinese yuan will likely remain highly influential on the Aussie, particularly with Japanese financial markets closed for a public holiday.

The quiet event calendar continues into the second half of the session with few major releases of note.

The main highlight comes from the Eurozone with industrial production data for November. Given weakness in the major Eurozone economies ahead of this release, a subdued outcome is expected.

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