The Australian dollar has opened the new trading week modestly higher, maintaining the gains achieved last Friday following the release of the advanced US Q4 GDP report which underwhelmed market expectations.
Here’s the scoreboard as at 7.40am AEST:
- AUD/USD 0.7554 , 0.0008 , 0.11%
- AUD/JPY 86.61 , -0.11 , -0.13%
- AUD/CNH 5.1883 , 0.0126 , 0.24%
- AUD/EUR 0.7045 , 0.0001 , 0.01%
- AUD/GBP 0.6000 , -0.0004 , -0.07%
- AUD/NZD 1.0371 , 0.0007 , 0.07%
After climbing from a low of .7507 on Friday, Richard Grace, chief currency strategist at the Commonwealth Bank, believes the strength in the AUD/USD will persist, at least in the early parts of the week.
“(The) AUD/USD is likely to remain firm early in the week, but then decline under the weight of a stronger USD post Thursday’s likely-hawkish FOMC statement,” he wrote on Monday morning.
“AUD/USD should however see some support post the FOMC statement from the fact that we are set to see another strong Australian monthly trade surplus, courtesy of higher commodity prices and higher export volumes.”
Grace says that the AUD/USD will likely retain strong buying support at its 200-day moving average, currently located at .7476.
While there is a smattering of economic data released during Monday’s trading session in Asia — New Zealand trade data along with Japanese retail sales just to name two — with many major markets remaining closed for Lunar New Year celebrations, it’s likely to be a quiet trading session for markets, including the Australian dollar.
If there is to be any volatility generated, it will likely be provided by movements in the Japanese yen, often influential on the US dollar index during periods of quiet trade in Asia.
Later in the session, markets will receive Q4 GDP from Spain, German CPI, euro area consumer confidence along with personal income and consumption figures from the United States, including all important core PCE price inflation which is the preferred gauge of price pressures used by the US Federal Reserve.
US pending home sales data for December will also be released.