The Australian dollar continued to push higher on Friday, benefiting from broad-based US dollar weakness, strength in commodity prices and a noticeable improvement in investor sentiment.
The AUD/USD hit a high of .7469 at one point during the session, leaving it sitting at the highest level since May 3.
Elias Haddad, senior currency strategist at the Commonwealth Bank, said that most of the move was driven by US dollar weakness which fell to a fresh six-month low during the session.
“The political drama from the White House and cautious comments from FOMC non-voter James Bullard weighted on the USD,” says Haddad.
“Bullard reiterated his support for just one more Fed funds rate hike this year and noted that ‘the FOMC’s contemplated policy rate path [two more 25bps rate hikes this year] is overly aggressive relative to actual incoming data on US macroeconomic performance’.”
That, along with a jump in iron ore prices and recovery in global stocks, no doubt assisted the Aussie’s move high during the session.
However, after hitting a more than two-week high on Friday, the Aussie has slipped in early Asian trade on Monday, succumbing to profit-taking following news of another successful test of a mid-range missile from North Korea and persistent US political concerns.
Here’s the scoreboard as at 7.45am AEST:
AUD/USD 0.7444 , -0.0015 , -0.20%
AUD/JPY 82.72 , -0.32 , -0.39%
AUD/CNH 5.1154 , -0.0116 , -0.23%
AUD/EUR 0.6639 , -0.002 , -0.30%
AUD/GBP 0.5715 , -0.0018 , -0.31%
AUD/NZD 1.0748 , -0.0007 , -0.07%
Hinting that broader market movements will continue to be driven by sentiment on Monday, the economic calendar is quiet to start the trading week.
Markets will receive trade figures from Japan and South Korea but neither is likely to cause a reaction in markets, including for the Aussie dollar. Later in the session the Chicago Fed’s National Activity index will also be released.
Given the quiet data calendar, it suggests that movements in US treasury yields, Chinese commodity futures and the USD/JPY — often influential on the broader US dollar in Asia — will likely dictate which direction the Australian dollar heads today.