- The Australian dollar rose against all major crosses on Monday, supported by weakness in the greenback and strength in stocks and commodity prices.
- The AUD/USD rose to as high as .7119, a level not seen since early March.
- The British pound was weighed down by renewed uncertainty over Brexit negotiations.
- There’s a lot on the economic calendar today, although most releases are unlikely to generate much volatility in currency markets.
The Australian dollar edged higher on Monday, rising to fresh multi-week highs against the greenback.
As seen in the scoreboard below at 8am in Sydney on Tuesday, it also performed well against the major crosses, especially the British pound.
AUD/USD 0.7103 , 0.0016 , 0.23%
AUD/JPY 79.14 , 0.13 , 0.16%
AUD/CNH 4.7727 , 0.0154 , 0.32%
AUD/EUR 0.6263 , 0.0004 , 0.06%
AUD/GBP 0.5359 , 0.0026 , 0.49%
AUD/NZD 1.0362 , 0.001 , 0.10%
AUD/CAD 0.9471 , 0.0022 , 0.23%
The AUD/USD rose to the highest level since early March during the Asian session, helped by a combination of strength in stocks, stop-loss orders being triggered above the .7100 level and continued gains in iron ore prices on renewed concern about the outlook for Brazilian supply.
After lifting to .7119, the AUD/USD eased lower in Europe before lifting back above the .7100 level late in North American trade.
While the move was not significant, the US dollar was under modest selling pressure ahead of the US Federal Reserve’s FOMC meeting that will begin today.
As has been the case for several weeks, the big move during the session came from the British pound which fell heavily on renewed uncertainty over the future path of Brexit negotiations.
“The Speaker of the UK House of Commons warned Theresa May that she will not be able to re-table the same Brexit deal to another parliamentary vote,” said David de Garis, Economist at the National Australia Bank.
“She can only put it to a vote if there are substantial changes to it. Another proposed deal then would likely require at least a meaningful change to the Irish backstop, a key point of contention.”
May’s proposed withdrawal agreement has already failed on two previous occasions, including just last week.
The news saw the GBP/USD tumble before recouping losses in the latter parts of trade.
Against the other major crosses, the Aussie dollar may have been supported by further gains in iron ore and crude oil futures during the session.
Turning to the session ahead, there’s a plethora of RBA releases scheduled in Australia. However, whether they will have any meaningful impact on the Aussie dollar is questionable.
At 9am AEDT, Chris Kent, RBA Assistant Governor, will speak on Bonds and Benchmarks in Sydney.
“While it’s a speech of interest for the market in terms of appropriate benchmarks, spreads and the like, the broader market will be interested to know whether Kent would chance his arm in the Q&A on Q4 GDP, very recent data and any particular views on housing, the economy and monetary policy,” de Garis said.
That speech will be followed at 11.30am AEDT by the release of the minutes from the RBA’s March monetary policy meeting. Given the meeting was held one day before Australia’s very weak Q4 GDP report was released, any optimistic commentary from the bank is likely to be largely ignored by financial markets.
The ABS will also release its Q4 residential property price index at 11.30am AEDT. It’s dated and markets know that prices have been falling, hence it will attract next to no interest from traders.
Across the rest of the Asian region the data calendar is quiet, paving the way for Chinese financial markets to once again dictate how broader currency markets will fare in the first half of the session.
Later in the day, the economic calendar will begin to pickup in Europe with the release of UK unemployment data, German investor sentiment from the ZEW Institute and Q4 labour costs from the Eurozone.
The calendar will be quiet in the US with factory orders and weekly crude oil inventory data from the API the only releases of note.
For New Zealand dollar traders, the latest GDT dairy auction will also be held.
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