Despite a lift in risk aversion across markets, sending gold, the Japanese yen, S&P 500 VIX and US treasuries sharply higher, the Australian dollar did very little in overnight trade, oscillating in a thin range once again before closing almost unchanged for the session.
Here’s the early scoreboard at 7.50am AEST.
- AUD/USD 0.7495 , -0.0001 , -0.01%
- AUD/JPY 82.1 , -0.08 , -0.10%
- AUD/CNH 5.1724 , -0.0014 , -0.03%
- AUD/EUR 0.7064 , -0.0008 , -0.11%
- AUD/GBP 0.6000 , -0.0002 , -0.03%
- AUD/NZD 1.0767 , 0.0002 , 0.02%
Since the beginning of the week, the AUD/USD has traded in daily ranges of just 36 pips and 44 pips respectively, continuing the run without an intraday move of more than one cent to 20 consecutive sessions.
It’s been a little dull.
The small move on Tuesday came despite a noticeable lift in risk aversion sparked by increased geopolitical concerns over the Korean peninsula and Syria.
“The global macro picture has been muddied by a rise in geopolitical tensions, economic data releases overnight have been largely ignored and safe haven assets have outperformed,” said Rodrigo Catril, currency strategist at the National Australia Bank.
“North Korea has warned of nuclear strikes if provoked and Trump’s fingers have also played a role, tweeting ‘North Korea is looking for trouble’ and ‘If China decides to help, that would be great. If not, we will solve the problem without them! U.S.A’.”
North Korea is looking for trouble. If China decides to help, that would be great. If not, we will solve the problem without them! U.S.A.
— Donald J. Trump (@realDonaldTrump) April 11, 2017
That came on top of continued concerns surrounding Syria with report suggesting that Russian president Vladimir Putin had hardened his support for the Syrian regime ahead of a meeting with US secretary of state Rex Tillerson.
That had an impact on several prominent risk proxies, but was not enough to rattle the usually risk-sensitive Australian dollar.
In the absence of any major economic data, the Aussie was likely supported by falling US treasury yields and a recovery in US stocks in the latter part of trade, helping to stymie selling pressure resulting from continued weakness in iron ore prices and increased investor nerves.
As a result, the AUD/USD finished almost unchanged for the session, although the Aussie lost ground against the likes of the Japanese yen and euro.
Turning to Wednesday trade in Asia, there is a plethora of economic data releases scheduled across the region, although none stands out as a potential catalyst to shake the Aussie from its slumber.
In Australia, the latest Westpac-MI consumer sentiment report will be released at 10.30am AEST. That will be followed an hour later by the release of Chinese consumer and producer price inflation figures for March.
CPI is expected to rise 1% from a year earlier, up from 0.8% in February, while producer price inflation is tipped to show an increase of 7.4% over the same period, down from 7.8% reported previously.
Later in the session, markets will receive UK unemployment figures along with CPI from Spain. Bank of England governor Mark Carney will also speak in early European trade.
In the US, import and export price data for March will be released.
The Bank of Canada will also announce its April monetary policy decision, although no change is expected.
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