- The Australian dollar was hammered on Monday, falling to the lowest level since January 2017 against the greenback.
- A resurgent greenback, along with steep declines in commodity prices ahead of the introduction of US tariffs on Chinese imports on Friday, were the main catalysts behind the steep reversal.
- The RBA will announce its July interest rate decision later today. Australian building approvals data will also be released.
The Australian dollar was poleaxed on Monday, tumbling to the lowest level since January 2017 at one point during the session.
A resurgent greenback, along with steep declines in commodity prices ahead of the introduction of US tariffs on Chinese imports on Friday, proved to be a potent mix, seeing the AUD/USD reverse all of Friday’s gains, and more, during the session.
Here’s the scoreboard as at 7am in Sydney.
AUD/USD 0.7339 , -0.0063 , -0.85%
AUD/JPY 81.37 , -0.40 , -0.49%
AUD/CNH 4.9058 , 0.006 , 0.12%
AUD/EUR 0.6304 , -0.0035 , -0.55%
AUD/GBP 0.5584 , -0.0021 , -0.37%
AUD/NZD 1.0926 , 0.0048 , 0.44%
AUD/CAD 0.9674 , -0.0051 , -0.52%
After opening the week just above the 74 cent level, the AUD/USD came under pressure in Asia, weighed down by another plunge in Chinese stocks, renewed weakness in the Chinese yuan and data showing new export orders placed at major Asian manufacturers fell in June.
The negative sentiment in Asia spilled over into Europe, seeing the AUD/USD slump to as low as .7308, a level last seen in early January 2017.
Along with a deterioration in investor risk appetite, helping the US dollar attract safe-haven flow, the greenback was also supported by strong US economic data and renewed political uncertainty in Germany — the latter which has since been resolved.
The AUD/USD managed to find buying support during North American trade, helped by a recovery in US stocks after an early selloff.
Turning to the day ahead, sentiment, rather than economic data, looks set to dictate direction despite the release of major economic data and the Reserve Bank of Australia’s (RBA) July interest rate decision.
The RBA is unilaterally expected to leave official interest rates unchanged at 1.5%, meaning all eyes will be on the accompanying monetary policy statement.
This 10-second guide has more on what to look out for in the statement.
Before the RBA rate decision arrives, Australian building approvals data for May will be released at 11.30am AEST.
Approvals are expected to remain unchanged following a 5% drop in April. Recent new home sales data suggests the risk today may be to the downside.
Outside of Australia, other data highlights today include New Zealand business confidence from the NZIER, UK construction PMI, Eurozone producer price inflation and retail sales along with factory orders and Empire State manufacturing index in the United States.
Given recent trends, the performance of Chinese financial markets could also prove influential on the Aussie, especially in Asian trade.
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