The Australian dollar couldn't escape the carnage in markets overnight

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The Australian dollar couldn’t escape the carnage in financial markets overnight, tumbling to a fresh three-week low.

After opening the session above 76 cents, it was one-way traffic for the Aussie in Asian trade, sliding lower on the back of higher US treasury yields, weakness in the Chinese yuan and dovish commentary from Reserve Bank of New Zealand, raising questions as to whether the RBA was truly through with cutting rates.

The common denominator was US dollar strength, something that continued in overnight trade with the US dollar index rising to the highest level seen since March, according to pricing from Thomson Reuters.

Along with steep falls in US stocks and a partial retracement of crude oil’s Putin-inspired rally on Monday, it undermined the Aussie throughout.

The AUD/USD currently buys .7538, having fallen to as low as .7529. It currently sits at lows not seen since September 21.

AUD/USD Hourly Chart

Looking ahead to Wednesday trade in Asia, there’s a smattering of Australian data releases to digest, although none looks set to move the Aussie sharply one way or another.

“This morning in Australia we get the Westpac-MI Monthly measure of Consumer Confidence which is unlikely to be market moving,” said Tapas Strickland, an economist at the National Australia Bank.

“The weekly ANZ-Roy Morgan measure has remained slightly above average for the past four weeks and so we expect the monthly measure to also tick slightly higher.

“The (ABS) also releases detailed Building Activity data, and while not usually observed by the market, will be of interest to economists in judging the pipeline of residential building activity,” he said.

Later in the session, all focus will be on the release of the minutes of the US Federal Reserve’s September FOMC meeting, says Strickland.

“Vice-chair Fischer said the September decision ‘was a close call’ and market attention will be paid to how close the Fed was to hiking rates in September – recall three out of four rotating regional feds dissented at the meeting,” he says.

The New York Fed president, Bill Dudley, will also deliver a speech, remembering that he is a permanent voting member of the FOMC.

Outside of the outlook for US interest rates, OPEC will also release its monthly oil market report, something that could garner some attention given recent moves in the oil price.

The Aussie has been loosely correlated with the oil price in recent sessions, so this has the potential to drive movements in the Aussie during European trade.

Here’s the Australian dollar scoreboard as at 7.45am AEDT:

  • AUD/USD 0.7538 , -0.0068 , -0.89%
  • AUD/JPY 77.96 , -0.82 , -1.04%
  • AUD/CNH 5.0703 , -0.0375 , -0.73%
  • AUD/EUR 0.6815 , -0.0013 , -0.19%
  • AUD/GBP 0.6216 , 0.0066 , 1.07%
  • AUD/NZD 1.0668 , 0.0014 , 0.13%

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