- The Australian dollar remains stuck in a range, continuing to chop around without really going anywhere.
- Australia’s latest inflation report will be released today, providing a potential catalyst for the Aussie to break either higher or lower.
- In the absence of a surprise in the inflation report, the Aussie will continue to be influenced by the performance of Chinese financial markets, particularly the yuan.
The Australian dollar continues to chop around without really going anywhere, much like a stalemate in game of snakes and ladders.
It must have landed on a ladder on Tuesday.
Here’s the scoreboard at 7am in Sydney.
AUD/USD 0.7416 , 0.0037 , 0.50%
AUD/JPY 82.46 , 0.31 , 0.38%
AUD/CNH 5.0499 , 0.0306 , 0.61%
AUD/EUR 0.6348 , 0.0038 , 0.60%
AUD/GBP 0.5643 , 0.0012 , 0.21%
AUD/NZD 1.0904 , 0.0033 , 0.30%
AUD/CAD 0.9749 , 0.0031 , 0.32%
After coming under pressure in early Asian trade as the Chinese yuan hit a 13-month low against the US dollar, the AUD/USD began climbing as European traders rolled in, helped by strong gains in Chinese stocks and a reversal in the yuan.
Optimism towards cyclical assets — like commodities and the Aussie dollar — was undoubtedly helped by news that policymakers in China are rolling out a series of measures to help bolster economic growth, with the hint there may be more to come.
That saw the AUD/USD lift to as high as .7434 before running into overhead resistance, eventually closing the session at .7420.
Turning to the day ahead, the Aussie’s fascination with gyrations in Chinese financial markets, particularly the yuan, is likely to dissipate momentarily with the release of Australia’s June quarter consumer price inflation (CPI) report at 11.30am AEST.
Markets expect headline CPI to grow 2.2% from a year earlier, up from 1.9% in the 12 months to March. Underlying CPI, of more importance to the outlook for official interest rate settings from the RBA, is expected to decelerate to a year-ended rate of 1.9%, down from 2% in the previous CPI report.
This 10-second guide has more on what to expected from this noted market-mover.
Outside of Australia, other data highlights today include New Zealand trade figures, German business confidence, Eurozone monetary growth along with new home sales from the United States.
It’s a quiet data calendar, likely ensuring movements in the Aussie will continue to be influenced by sentiment and the performance of Chinese financial markets should no real surprises be contained in Australia’s inflation report.
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