The Australian dollar erases gains as the greenback stages a comeback

Jamie McDonald/Getty Images
  • The Australian dollar gave up gains against the greenback on Thursday to close the session marginally lower.
  • The US dollar staged a dramatic reversal during the session on no particular news.
  • It’s flash PMI day with reports from Japan, Europe and the US set to be released. There’s also some big data points on the way in Canada.

The Australian dollar had a wild session on Thursday, giving up early gains to finish marginally lower.

However, it put in a stronger performance against the major crosses, especially the British pound and euro.

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

AUD/USD 0.7109 , -0.0006 , -0.08%
AUD/JPY 78.79 , 0.04 , 0.05%
AUD/CNH 4.7683 , 0.0112 , 0.24%
AUD/EUR 0.6249 , 0.0017 , 0.27%
AUD/GBP 0.5422 , 0.0031 , 0.58%
AUD/NZD 1.0337 , 0.0001 , 0.01%
AUD/CAD 0.9507 , 0.0041 , 0.43%

After opening at .7115, the AUD/USD rose to as high as .7167 during the session, propelled higher by news that Australia’s unemployment rate fell to an eight-year low of 4.9% in February.

However, having surged more than a percent following the release of the US Federal Reserve’s March interest rate decision, the AUD/USD couldn’t go on with the move, gradually giving back ground over the remainder of the session.

Investing.comAUD/USD Hourly Chart

The big factor behind the reversal was not Australian dollar weakness but US dollar strength, a scenario in complete contrast to the price action seen a session earlier.

“In a world where major central banks look set to remain on the sidelines for the remainder of this year with the risk of easing more likely than tightening, the US economy continues to win the least ugly contest,” said Rodrigo Catril, Senior FX Strategist at the National Australia Bank.

“Thus, the USD looks attractive amid a likely low volatility environment and carry appeal.”

US economic data released on Thursday helped the greenback’s cause with initial jobless claims and Philly Fed manufacturing index both topping expectations.

Ongoing Brexit dramas also provided the dollar with a tailwind, helping to grad the British pound and euro lower during the session.

Turning to the day ahead, it will likely be quiet in Asia with most of major data releases set to arrive in the second half of the session.

Japanese CPI data for February, along with the flash manufacturing PMI for March, will be the main areas of interest in Asia.

The quiet data calendar opens the door for headlines and Chinese markets to dictate broader movements during the session.

Flash manufacturing and services PMIs for the Eurozone and US look set to dominated in the second half of the session. Alongside those reports, markets will also receive retail sales and CPI from Canada — it could be a big day for the loonie!

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