The Australian dollar continues to grind higher

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  • The Australian dollar rose against most major crosses on Wednesday, helped by continued buying in the Chinese yuan and firmer commodity prices.
  • The minutes of the Fed’s January monetary policy meeting saw the greenback reverse earlier losses against most of the majors.
  • Australia’s jobs report will dominate the Asian session. Flash PMI reports will be in focus later in the day.

The Australian dollar ground higher against most of the major crosses on Wednesday, helped by further buying in the Chinese yuan and strength in most commodity prices.

Here’s the scoreboard at 8am in Sydney on Thursday.

AUD/USD 0.7162 , -0.0001 , -0.01%
AUD/JPY 79.38 , 0.15 , 0.19%
AUD/CNH 4.8093 , -0.0219 , -0.45%
AUD/EUR 0.6315 , 0 , 0.00%
AUD/GBP 0.5486 , 0.0004 , 0.07%
AUD/NZD 1.0442 , 0.004 , 0.38%
AUD/CAD 0.9437 , -0.0026 , -0.27%

After opening the session at .7163, the AUD/USD chopped around in Asian trade as a slight miss on Australian wage growth in the December quarter last year was partially offset by continued strength in the Chinese yuan.

In European and North American trade, the Aussie pretty much moved in lockstep with the Chinese yuan with both hitting two and three-week highs respectively towards the close.

The AUD/USD rose to as high as .7182, the highest level since February 6, while the USD/CNH fell to as low as 6.7080, a level not seen since February 1.

However, the release of the US Federal Reserve’s January FOMC meeting minutes saw the rally stall as the US dollar began to strengthen.

“Many participants observed that if uncertainty abated, the Committee would need to reassess the characterisation of monetary policy as ‘patient’ and might then use different statement language,” the minutes read.

Not exactly a tone that suggests the FOMC is done with rate hikes, especially should uncertainty begin to clear.

The line helped to the greenback to reverse earlier losses against most of the majors, helped by a modest lift in US bond yields. That subsequently saw the AUD/USD give back earlier gains. It’s largely unchanged for the day with an hour left to trade.

Investing.comAUD/USD Hourly Chart

Turning to the day ahead, there’s plenty on the economic calendar to keep traders interested.

Domestically, Australia’s January jobs report will dominate when released at 11.30am AEDT. Markets are looking for an increase in employment of 15,000 leaving the unemployment rate steady at 5%.

This 10-second guide has more on what to look out for in this key report, including why the risks for the unemployment rate may be to the upside.

Before that arrives, the Commonwealth Bank-IHS Markit Australian flash composite PMI will also arrive at 9am AEDT, providing an early indication on how services and manufacturing firms have fared this month.

Later in the session PMI reports will continue to dominate with figures from Japan, Germany, France, Eurozone and United States all set to be released.

Other highlights include CPI from Germany, France and Italy along with durable goods orders, jobless claims, existing home sales, crude oil inventories and the Philadelphia Fed’s manufacturing index in the United States.

On the central bank front, Bostic from the Fed, the ECB’s Praet, Poloz from the BoC and the BoE’s Haldane will are all in action.

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