- The Australian dollar has managed to hold onto most of its euro and China-led bounce from Friday in early trade on Monday.
- The economic data calendar is busy today with PMI reports set to dominate.
- Crude oil futures could also be influential on commodity-linked currencies today following a tweet from US President Donald Trump over the weekend.
The Australian dollar is back at 74 cents in early Asian trade on Monday morning, managing to sustain the euro and China-led bounce seen on Friday.
Here’s the scoreboard as at 8am in Sydney.
AUD/USD 0.7395 , -0.0007 , -0.09%
AUD/JPY 81.84 , 0.07 , 0.09%
AUD/CNH 4.9060 , 0.0062 , 0.13%
AUD/EUR 0.6336 , -0.0003 , -0.05%
AUD/GBP 0.5601 , -0.0004 , -0.07%
AUD/NZD 1.0902 , 0.0024 , 0.22%
AUD/CAD 0.9729 , 0.0004 , 0.04%
After falling to the lowest levels since January 2016 earlier in the week, the AUD/USD found support on Friday from a surge in the euro and Chinese stocks, helping to propel it as high as .7410 before closing the week at .7402.
A small reversal in the Chinese yuan, seeing it recover from losses seen earlier in the session, also helped to lift the Aussie.
While the Aussie came under initial selling pressure this morning on the back of renewed political uncertainty in Germany, the AUD/USD is now trading just below the 74 cent level.
“The bounce in all things EUR during Friday’s session on news of European Council agreement on dealing with migration issues carried into the offshore session and proved to be a rising tide that floated all boats… where the USD fell against everything bar JPY to be 0.9% down in DXY terms,” said Ray Attrill, Head of FX Strategy at the National Australia Bank.
“This morning the EUR/USD gave back 40% of Friday’s 1% rise, after Horst Seehofer, the chairman of the CSU – the Bavarian sister party for Angela Merkel’s CDU — came out Sunday saying that the EU’s migration plan is not in line with the party’s demands.
“But Seehofer has now quit both as interior minister and CSU party chairman, news that has seen EUR/USD fully retrace the early-day losses.”
The Aussie may have also come under early selling pressure from news that China’s manufacturing sector slowed faster-than-expected in June, according to data released by the Chinese government on Saturday.
“AUD initially struggled to maintain a foothold on the 0.74 level first thing this morning, thanks both to the earlier give-back in the EUR and perhaps also in reaction to Saturday’s China PMI data, where the official manufacturing version came in at 51.5 down from 51.9 in May and just beneath the 51.6 expected,” Attrill said.
Turning to the day ahead, it will be a busy one for data releases both in Australia and abroad.
Locally, the Ai Group will release its manufacturing PMI for June at 8.30am AEST. That will be followed by CoreLogic’s monthly Home Value Index and ANZ Job ads for June that will arrive at 10am and 11.30am AEST respectively.
Outside of Australia, regional highlights include the release of manufacturing PMI reports from China, Japan, India and South Korea.
The Bank of Japan’s quarterly Tankan survey of manufacturing conditions will also arrive during the session.
Later in the day, the PMI deluge continues in Europe and the United States. Construction spending from the United States, along with unemployment data and producer price inflation from the Eurozone, will also be of interest to traders.
Outside of the data calendar, also keep an eye on crude oil futures following this tweet from US President Donald Trump over the weekend.
Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference…Prices to high! He has agreed!
— Donald J. Trump (@realDonaldTrump) June 30, 2018
While attempt to walk back from the statement have come from both the Saudi’s and White House on Sunday, it could still prove to be influential on futures markets, as well as commodity-linked currencies.