The Australian dollar has surged in early trade

Darrian Traynor / Getty Images
  • The Australian dollar has surged in early Asian trade on Monday.
  • Renewed optimism over US-Sino trade negotiations, along with attempts from Donald Trump to jawbone the greenback lower, are the main catalysts helping to move.
  • The Australian economic calendar is busy today and could easily see the Aussie extend or reverse its early move.

The Australian dollar has surged out of the blocks in early Asian trade on Monday, climbing against most of the major crosses.

Continued optimism towards trade negotiations between the United State and China, along with attempts from US President Donald Trump to jawbone the greenback lower, appear to be the main catalysts behind the sudden lift in thin trade.

Here’s the scoreboard at 8.05am in Sydney.

AUD/USD 0.7110 , 0.003 , 0.42%
AUD/JPY 79.52 , 0.35 , 0.44%
AUD/CNH 4.7608 , 0.0105 , 0.22%
AUD/EUR 0.6244 , 0.0024 , 0.39%
AUD/GBP 0.5358 , -0.0001 , -0.02%
AUD/NZD 1.0410 , 0.0006 , 0.06%
AUD/CAD 0.9418 , 0.0072 , 0.77%

After closing last week at .7080, the AUD/USD currently trades at 0.7110, helped by a report from The Wall Street Journal suggesting that the US and China are close to agreeing a trade deal with a formal agreement likely be reached at a Xi-Trump summit scheduled for around March 27.

“The news should be a positive for risk sentiment at the start of the new week,” said Rodrigo Catril, Senior FX Strategist at the National Australia Bank.

While seemingly good news, similar reports have been heard before, an outcome that has seen financial markets largely price in an amicable agreement arriving between the two sides. The timing of the story is also impeccable, arriving in early Asian trade when very little volumes can lead to large price movements.

Even before the WSJ story broke, the US dollar was already under pressure following attempts from US President Donald Trump over the weekend to jawbone the greenback lower.

Investing.comAUD/USD Hourly Chart

Turning to the session ahead, the economic data calendar is busy in Australia with the release of further Q4 GDP inputs, along with building approvals data for January, at 11.30am AEDT.

For the Q4 business indicators release, operating profits are expected to lift by 3% for the quarter, primarily reflecting the impact of stronger commodity prices for mining firms. Business inventories are also expected to edge up by 0.3%, an outcome that will add around 0.1 percentage points to quarterly GDP growth on an expenditure basis.

Within the indicators report, measures on employee compensation will also be closely watched given increased uncertainty over the outlook for Australian household spending.

Separately, the ABS will also release Australia’s building approvals report for January alongside the business indicators report. After tumbling in the prior two months, a small increase of 1.5% is expected.

The latest Australian inflation gauge from the Melbourne Institute will also be of interest when released at 11am AEDT, as will ANZ job ads for February at 11.30am AEDT.

Outside of the Australian data deluge, the calendar is quiet with Japanese monetary growth figures for January the only other release of note.

Later in the session, other data highlights include UK construction PMI, Eurozone PPI and Sentix investor sentiment along with construction spending, and Empire State manufacturing index from the United States.

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