The Aussie dollar's still climbing

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  • The Australian dollar is still climbing, hitting a fresh two-month high against the greenback on Thursday.
  • Gains in US stocks and another surge in iron ore prices helped to underpin the Aussie’s gains.
  • The euro was undermined by a string of soft economic data released, including news that Italy is back in recession.
  • It’s a bust data calendar on Friday. The highlights are the US payrolls report and Eurozone inflation for January.

The Australian dollar continued to rally on Thursday, adding to the strong gains seen on Wednesday.

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

AUD/USD 0.7267 , 0.0021 , 0.29%
AUD/JPY 79.12 , 0.12 , 0.15%
AUD/CNH 4.8750 , 0.0129 , 0.27%
AUD/EUR 0.6346 , 0.0034 , 0.54%
AUD/GBP 0.5540 , 0.0016 , 0.29%
AUD/NZD 1.0509 , 0.0001 , 0.01%
AUD/CAD 0.9548 , 0.002 , 0.21%

After jumping more than one percent on Wednesday, the AUD/USD rose to as high as .7295 in early North American trade, finding support from soaring iron ore prices and continued strength US stocks.

However, it gave back most of those gains towards the close, trading at .7267 with one hour to go despite the release of a string of positive headlines on US-Sino trade negotiations.

Investing.comAUD/USD Hourly Chart

The Aussie also posted modest gains against all of the major crosses, especially the euro that was weighed down by the largest decline in German retail sales in 11 years in December and news that Italy, the Eurozone’s third-largest economy, fell into recession late last year.

Turning to the day ahead, there’s plenty on the economic events calendar, although most of the heavy-hitting releases will arrive in the second half of the session.

Domestically, the Ai Group and Commonwealth Bank will release separate manufacturing PMI reports for January at 8.30am and 9am AEDT respectively. That will be followed by CoreLogic’s Home Value Index for January at 10am AEDT. Given the daily data seen throughout most of January, another hefty decline in prices is likely, especially in Sydney and Melbourne.

Regionally, markets will also receive a swathe of manufacturing PMI reports with China and Japan the headline acts. Japanese unemployment data for December will also be released.

The manufacturing PMI deluge continues in Europe with readings from the Eurozone and UK of most interest to traders. Eurozone inflation data for January also carries the potential to generate short-term market volatility.

“Inflation is expected to ease to 1.4% from 1.6% while core CPI is expected to be steady at 1.0%,” said David de Garis, Economist at the National Australia Bank.

In the US, January’s non-farm payrolls report will garner plenty of attention, especially given the potential that it may be impacted by the partial government shutdown.

Payrolls are expected to grow by 165,000, down from 312,000 in December, with the unemployment rate holding steady at 3.9%. Average hourly earnings growth is seen easing from 0.4% to 0.3%, keeping the annual increase unchanged at 3.2%.

Aside from the payrolls report, traders will also have to navigate the ISM manufacturing PMI for January, construction spending and University of Michigan consumer sentiment survey.

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