The Australian dollar continues to slide as geopolitical concerns swirl

Photo by Scott Barbour/Getty Images

The Australian dollar continues to be buffeted by geopolitical concerns, losing further ground against the Japanese yen, euro and US dollar on Thursday.

Here’s the scoreboard just before 7am AEST.

AUD/USD 0.7875 , -0.0011 , -0.14%
AUD/JPY 85.98 , -0.81 , -0.93%
AUD/CNH 5.2494 , -0.0268 , -0.51%
AUD/EUR 0.6688 , -0.0017 , -0.25%
AUD/GBP 0.6068 , 0.0005 , 0.08%
AUD/NZD 1.0816 , 0.0072 , 0.67%
AUD/CAD 1.0034 , 0.0026 , 0.26%

With no major economic data released on Thursday, markets continued to be driven by geopolitical concerns surrounding North Korea and the US with investors clearly getting nervous that this war of words could potentially turn into something far more serious.

The Aussie dollar, as a well-know proxy for investor sentiment, has understandably suffered during this latest flare-up, as seen in the hourly chart of the AUD/USD seen below.

AUD/USD Hourly Chart

While geopolitics will continue to dictate the broader theme of markets today, there are two events that traders should be aware of if they’re dabbling in the Aussie.

The first is Reserve Bank of Australia (RBA) governor Philip Lowe’s Lowe’s semiannual testimony to the House Economics Committee in Melbourne starting at 9.30am AEST. the second is the release of US consumer price inflation (CPI) data for July later in the session.

“No doubt he will be quizzed on the AUD, the state of the housing and labour markets as well as China and geopolitics,” says Rodrigo Catril, currency strategist at the National Australia Bank.

“Our economists suggest the governor’s opening statement will be a potted summary of the refreshed assessment and outlook outlined in the SoMP [statement on monetary policy] last week.”

While these events always carry the potential to surprise, we’ve heard plenty from the RBA over the past two weeks. It’s also been some time since an appearance from the RBA governor before the government has led to an outsized move in markets.

We’ll see what he has to say.

Outside of the RBA governor’s appearance, the other market risk event today will be the release of US CPI for July at 10.30pm AEST.

Core inflation — the figure markets will be looking at — is expected to lift by 0.2% for the month, leaving the year-on-year rate unchanged at 1.7%.

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