- The Australian dollar has given back earlier gains on Wednesday to close mixed against the major crosses.
- It hit a fresh 20-month low against the greenback before climbing higher late in the session as some emerging market currencies stabilised.
- Australian trade data will be released on Thursday. The US data calendar is also busy. However, broader moves will likely be dictated by headlines and the performance of emerging markets.
The Australian dollar remains under pressure, failing to sustain the bounce following the release of Australia’s GDP report on Wednesday.
For the moment, strong economic growth is being trumped by geopolitics and concerns surrounding emerging markets.
Here’s the scoreboard as at 7am in Sydney.
AUD/USD 0.7194 , 0.0017 , 0.24%
AUD/JPY 80.24 , 0.26 , 0.33%
AUD/CNH 4.9226 , 0.0071 , 0.14%
AUD/EUR 0.6185 , -0.0011 , -0.18%
AUD/GBP 0.5574 , -0.0007 , -0.13%
AUD/NZD 1.0912 , -0.0032 , -0.29%
AUD/CAD 0.9479 , 0.0014 , 0.15%
After beginning the day below the .7200 level, the AUD/USD surged higher midway through the Asian session, bolstered by the release of Australia’s Q2 GDP report which easily breezed past market expectations.
However, the move didn’t long with sharp declines in Asian stocks — particularly in China — seeing risk sentiment sour noticeably, pushing the AUD/USD back below the .7200 level in early European trade.
As seen in the 5-minute chart below, the Aussie has been hammered upon the European open in each of the past two sessions, sending the AUD/USD to fresh 20-month lows.
After falling below .7150 briefly, the AUD/USD crawled higher for the remainder of the session, undoubtedly helped by a stabilisation in some emerging market currencies.
That contributed to some modest weakness in the greenback, helping not only the Aussie but other major currencies to crawl off lows struck earlier in the session.
While the Aussie eked out a small gains against the US dollar, it fell against both the British pound and euro which benefited from positive reports on Brexit and Italian budget negotiations. While the former was later denied by officials, it wasn’t enough see the earlier moves reversed entirely.
The Canadian dollar lagged the broader move in commodity currencies as sharply lower crude prices offset offset hawkish commentary from the Bank of Canada and optimism towards trade negotiations with the United States.
The New Zealand dollar was the standout performer, seemingly benefiting from short-covering, rather than any actual news, after falling heavily earlier in the week.
Turning to the day ahead, there’s a smattering of data releases scheduled both in Australia and abroad.
Locally, Australia’s trade report for July will be released with a surplus of $1.5 billion expected. It will arrive at 11.30am AEST.
Data highlights later in the session include German factory orders, Canadian building permits along with services PMI, jobless claims, ADP private sector employment, labour costs, factory orders and crude oil inventories from the EIA from the United States.
Despite the heavy US calendar, it’s debatable just how much influence it will have on broader currency markets, especially with the prospect of the US implementing new tariffs on $US200 billion worth of Chinese imports by the end of the week.
As such, the performance of emerging markets, along with headlines, will likely continue to drive direction during Thursday’s trading session.
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