Surging crude prices dragged the Australian dollar higher overnight

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Riding on the coattails of crude oil futures which closed at a fresh six-month high on Monday, the Australian dollar managed to cling on to its Asian sessions gains overnight, oscillating in a thin range between .7274 to .7308 throughout US and European trade.

The AUD/USD eventually ended the session buying .7287, up 0.33% on Friday’s close. As at 8am AEST, is currently trading unchanged for Tuesday’s session.

AUD/USD Daily Chart

While a strong session for US stocks also contributed to the gain, Ray Attrill, NAB’s global co-head of FX strategy, notes that all risk assets were humming to the tune of crude prices in overnight trade.

“After a few days when it looked as though global markets, whether in FX, rates or equities, were no longer moving in lock-step with intra-day swings in the oil price, oil looks to be back front and centre of things this morning,” wrote Attrill in his Tuesday morning note.

“Brent crude is within kissing distance of $50 for the first time since November last year (+$1.24 on the night to $49.07) while WTI crude has advanced an even bigger $1.67 to 47.88, also its best level since November.”

In what will no doubt create some interest, Attrill notes that the oil-led rebound saw the Aussie close above its 200-day moving average of .7257, a level it briefly dipped below in early Asian trade following the release of weak Chinese economic data over the weekend.

Looking ahead to Asia’s Tuesday session, Attrill describes it as a “fairly big day” with market-moving releases scheduled both at home and abroad.

Of most interest in Asia will be the release of the RBA’s May monetary policy meeting minutes, an event where the board decided to cut the official cash rate to 1.75% in the wake of a significantly lower inflation outlook.

Despite the shock waves created by the move in the subsequent weeks, Attrill suggests there’s unlikely to be any surprises found within the minutes.

“On the Minutes, if we go back to February 2015 when the RBA last initiated a mini-easing cycle, neither the post-meeting statement nor the subsequent minutes revealed an explicit bias regarding the prospects for further easing,” suggests Attrill.

“However, come March it became clear both in the statement and the minutes that the RBA had its finger firmly on the easing trigger. As such, we might learn a lot less about the RBA’s proclivity to cut rates further today than following the March meeting.”

Outside the release of the minutes markets will also receive the latest weekly ANZ-Roy Morgan consumer confidence at 9.30am AEST along with new car sales from the ABS at 11.30am AEST.

Regionally, Singapore non-oil exports data for April — often cited as a harbinger for global trade flows — will also be released at 10.30am AEST

Later this evening it’ll also be a big session for US data releases with CPI, industrial production, housing starts and building permits all scheduled for release from 10.30pm AEST.

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