It's going to be an enormous week for the Australian dollar

Photo: Evans Vestal Ward/ Bravo /NBCU Photo Bank via Getty Images.

The Australian dollar has opened the new trading week within touching distance of 76 US cents, leaving it at the highest level seen since July 18.

The catalyst for the renewed surge — something that has seen the AUD/USD gain 2.4% from the lows seen last Wednesday — was a poor advanced Q2 US GDP report released on Friday evening, something that revealed the US economy grew at an annual pace of just 1.2% in three months to June, a figure that was well below forecasts for an expansion of 2.6%.

That, along with broad-based US dollar weakness as a result of the Bank of Japan’s monetary policy decision released earlier in the session — something of a disappointment for financial markets — helped to propel the Aussie dollar back above the 76 US cent level on Friday evening before slipping into the close.

As at 7.45am AEST, the AUD/USD buys .7596.

AUD/USD Daily Chart

Looking ahead to Monday’s session in Asia, there is a plethora of economic data prints scheduled for release, both domestically and across the region.

In Australia, markets will receive manufacturing PMI for July, new home sales for June, CoreLogic’s capital city house price index along with the latest MI inflation gauge for July. The latter, in particular, will likely garner plenty of attention given the continued focus on the outlook for inflation in the lead up to the RBA’s August monetary policy meeting on Tuesday.

Regionally, most attention will be on the release of manufacturing and non-manufacturing PMI gauges from China at 11am and 11.45am AEST respectively.

Elsewhere there are also PMI gauges released in Japan, South Korea and India over the course of Monday’s trading session.

According to Richard Grace, chief currency strategist at the Commonwealth Bank, the Aussie is likely to be buffeted by a series of domestic and international factors over the trading week.

“AUD/USD will this week be influenced by four major domestic factors this week, and end the week lower,” says Grace. “The four major domestic factors are the Australian international June trade figures (Tuesday), the RBA’s August board meeting (Tuesday), the Australian June retail trade numbers (Thursday) and the RBA’s Quarterly Statement on Monetary Policy (Friday).

From an offshore perspective, Grace suggests that the risk events begin today for the Aussie, starting with the China PMI releases.

“There are three additional offshore factors that will further influence the AUD over the course of this week,” he says.

“China’s July manufacturing PMI (Monday), which we believe will come in lower than consensus, and below 50.0, because floods disrupted economic activity across large parts of China during the month, US July non-farm payrolls (Friday), where we believe the employment report will be better than consensus of +180k, and movements in commodity prices and bond and equity markets.

Here’s the current Aussie dollar scoreboard, as as 7.45am AEST.

  • AUD/USD 0.7596 , 0.0001 , 0.01%
  • AUD/JPY 77.6 , 0.14 , 0.18%
  • AUD/CNH 5.0325 , 0.0022 , 0.04%
  • AUD/EUR 0.6796 , 0.0007 , 0.10%
  • AUD/GBP 0.5738 , 0.0005 , 0.09%
  • AUD/NZD 1.0544 , 0.0001 , 0.01%

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