The Australian dollar copped a pasting overnight

Photo by Robert Cianflone/Getty Images

The Aussie dollar was crushed last night, tumbling 1.5% against its US namesake.

AUD/USD 5-minute chart Source:

According to David de Garis, senior economist at the NAB, US dollar strength, and as a consequence significantly lower commodity prices, weighed on the Aussie throughout the overnight session.

“Commodities have again been the centre of selling with a further push lower in the price of oil, base metals, and gold, helped along by still evident support for the USD,” said de Garis in his morning note.

“Currency markets played to script, the commodity-related group coming in for more selling with the AUD at the forefront. The AUD/USD has traded overnight with 70 handle and this morning sits just above $0.71. Other commodity-related currencies to lose ground against the USD (that’s sitting at its cyclical high) include the NZD (-0.78%), CAD (-0.91%), and NOK (-0.76 %).”

Yes, as de Garis has succinctly pointed out, commodities – and their currency equivalents – copped an absolute pasting.

Suggesting that sentiment rather than fundamentals will drive the movements in the Aussie today, there are no major domestic data releases scheduled.

For the region, most attention will be on the outcome of the Bank of Japan’s (BoJ) latest monetary policy meeting that will be announced around 2pm AEDT.

While there is growing speculation that the BoJ may ease policy further in the months ahead, de Garis believes the bank will yet again hold fire later on today.

“There will be much more interest in the outcome of today’s Bank of Japan policy meeting and whether the BOJ will increase quantitative easing further in an effort to meet their inflation target,” said de Garis.

“Market opinion seems to be the door is open for the BOJ at some point to increase QE, but we are of the view that recent signs of continued tightening in the labour market, confirmed again in this week’s Tankan survey, together with policy measures to boost minimum wages and promote corporate investment, are buying more time for the BOJ to remain on hold for some time yet. From a policy perspective, the USD/JPY, sitting in the high 122s this morning, is doing its bit to promote inflation and growth objectives.”

Alongside the BoJ decision, Chinese house price data for November will be released at 12.30pm AEDT, although it’s unlikely to be market moving.

Here’s the current Aussie dollar scoreboard, as at 8.35am AEDT.

  • AUD/USD 0.7123 , -0.0108 , -1.49%
  • AUD/JPY 87.38 , -0.98 , -1.11%
  • AUD/CNY 4.6173 , -0.0628 , -1.34%
  • AUD/EUR 0.6583 , -0.0042 , -0.63%
  • AUD/GBP 0.4781 , -0.0037 , -0.77%
  • AUD/NZD 1.0628 , -0.0001 , -0.01%

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