The Australian dollar is finding friends as risk assets rebound

Johannes Simon/Getty Images.
  • The Australian dollar rose against the US dollar and Japanese yen on Tuesday but fell against the New Zealand and Canadian dollars as well as the British pound.
  • The AUD/USD briefly traded at .7150, the highest level in two weeks.
  • RBA Assistant Governor Guy Debelle will deliver a speech on Australian labour market conditions today. The Fed will also release the minutes of its September FOMC meeting.

The Australian dollar continued to inch higher against the greenback on Thursday but finished mixed against the crosses, once again paying scant attention to the Jekyll and Hyde-type mood swings seen in stocks around the world.

Here’s the scoreboard at 8am in Sydney.

AUD/USD 0.7141 , 0.0011 , 0.15%
AUD/JPY 80.15 , 0.47 , 0.59%
AUD/CNH 4.9358 , 0.0011 , 0.02%
AUD/EUR 0.6169 , 0.0012 , 0.19%
AUD/GBP 0.5415 , -0.0005 , -0.09%
AUD/NZD 1.0836 , -0.0045 , -0.41%
AUD/CAD 0.9236 , -0.0029 , -0.31%

After trading higher for most of the Asian session, helped in part by a strong Q3 inflation reading in New Zealand ahead of the release of Australia’s CPI report later in the month, the AUD/USD came under modest selling pressure in early European trade, hitting a low of .7113 before recouping all of those losses — and more — in the second half of the session.

That was despite the release of more incredibly strong labour market data from the United States with the number of job openings surging to 7.136 million in August, the highest level on record. The quit rate — regarded as an indicator on labour market conditions given it measures the number of workers who left their jobs voluntarily during the month — also held near the highest level in 17 years.

US industrial production and NAHB home builder sentiment also beat market expectations, adding to the lengthening list of bullish US economic indicators.

However, despite the solid data flow from the US, it had a negligible impact on the US dollar, allowing the AUD/USD to lift to .7151, the highest level in two weeks. Gains in emerging market currencies may explain the Aussie’s resilience, as well as the likelihood of modest short covering following a sharp decline in recent months.

The AUD/USD finished the session at .7140.

Investing.comAUD/USD Hourly Chart

Against the crosses, the Aussie put in a mixed performance, lifting strongly against the Japanese yen but giving back ground against the New Zealand and Canadian Dollars as well as the British pound.

The Kiwi was supported by its Q3 inflation report released earlier in the session. The GBP was also helped by a strong lift in wage growth in August.

The gains against the yen reflect the improvement in investor risk appetite seen during the session, especially among stock investors.

Turning to the day ahead, its another busy one for economic and central bank events both in Australia and abroad.

Domestically, RBA Assistant Governor Guy Debelle will speak from 8.20am AEDT on the state of Australia’s labour market. The latest Westpac-MI Leading Index will also arrive at 10.30am AEDT.

In the second half of the session, other highlights include CPI and PPI from the UK, Eurozone inflation along with building permits, housing starts and weekly EIA crude oil inventory data from the United States.

On the central bank front, Praet from the ECB, Broadbent from the BoE, Brainard from the Fed and Bundesbank President Jens Weidmann will all deliver speeches.

The minutes of the US Federal Reserve’s September FOMC meeting will also be released at 5am AEDT.

The EU leaders summit will also begin amidst heightened uncertainty over Brexit.

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