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The Australian dollar failed to break higher so traders have been taking profits

‘Yours’. Photo by Scott Olson/Getty Images.

The Australian dollar weakened overnight despite the release of strong Chinese economic data earlier in the session, succumbing to a bout of profit-taking after recording its largest weekly gain since March 2016 last week.

Here’s the scoreboard as at 7.50am AEST.

AUD/USD 0.7796 , -0.0002 , -0.03%
AUD/JPY 87.83 , 0.01 , 0.01%
AUD/CNH 5.2731 , -0.0009 , -0.02%
AUD/EUR 0.6791 , -0.0002 , -0.03%
AUD/GBP 0.5971 , -0.0002 , -0.03%
AUD/NZD 1.0636 , -0.0013 , -0.12%
AUD/CAD 0.9902 , 0.0006 , 0.06%

And while the AUD/USD briefly hit the highest level since June 2015 earlier in the session, a twin failure to convincingly break above the April 2016 high of .7835 may have promoted some technical selling in the Aussie, at least in the short term.

And here’s the 5-minute chart for the AUD/USD, showing the Aussie’s inability to break higher during the session.

AUD/USD 5-Minute Chart

Richard Grace, chief currency strategist at the Commonwealth Bank, said that AUD/USD remains in the process of “consolidating last week’s lift above 0.7800”.

“We anticipate this process to last some time,” he said in his Tuesday morning note.

After being dominated by Chinese economic data to start the week, movements in the Aussie dollar today will likely be determined by the release of the minutes of the RBA’s July monetary policy meeting at 11.30am AEST.

David de Garis, economist at the National Australia Bank, said that some of the Aussie’s weakness on Monday could have been caused by investor caution ahead of this release.

“There might be a degree of market trepidation ahead of the RBA minutes,” he said. “The minutes will be parsed for any enhancement of the summary reference to the exchange rate.”

Markets will be looking for any elaboration on the bank’s views on the Aussie dollar, along with its assessment on Australia’s economic growth outlook given it excluded commentary on growth being above 3% in the next few years in the policy statement.

Before the minutes arrive, New Zealand Q2 CPI will be released at 8.45am AEST. While this carries the potential to move the Aussie, it probably shouldn’t given it’s had a less that stellar track record of predicting what Australia’s CPI did over the same period.

Markets are looking for a quarterly increase of 0.2%, a sharp deceleration from the 1% gain seen in Q1.

After yesterday’s data dump, including Q2 GDP, the China data deluge continues today with the release of new home price data for June at 11.30am AEST.

Later in the session, markets will also receive CPI figures from the UK, German investor confidence along with trade prices and the monthly NAHB home builder confidence survey from the US.

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