If you’re watching the level of the Australian dollar, you’d be forgiven for thinking that it’s Groundhog Day. For the the fourth session on the trot it’s closed around .7220 against its US counterpart.
It’s been an amazing period of consolidation all things considered, especially given it had fallen by close to 8% in the preceding 19 sessions.
Somewhat remarkably, the steadiness in the Aussie came despite weakness in commodity prices, including a near-7% plunge in the iron ore price, Australia’s chief commodity export.
Looking at the short-term charts this morning, it’s clear that the Aussie was yet again singing to the crude oil prices’ tune in overnight trade, recovering in the second half of the US session as crude prices recovered to close above $48 a barrel.
It also failed to be undermined by more hawkish commentary from US Federal Reserve officials with James Bullard, a 2016 FOMC voter, and John Williams, a non-voter this year, doing little to counteract the growing belief that higher interest rates are coming, potentially as early as June.
Commodity prices were hit while the USD was given every opportunity to rally, and yet the Aussie held firm. Interesting.
As at 8am AEST, the AUD/USD buys .7224, up fractionally from the overnight close of .7220.
Looking ahead to Tuesday’s trading session in Asia, there is yet again next to no major data releases scheduled domestically or abroad, ensuring RBA governor Glenn Stevens will take centre stage.
Stevens is scheduled to address the Trans-Tasman Business Circle in Sydney from 1.05pm AEST, following up his address with an additional Q&A session.
“Stevens may draw reference to the low inflation and wages environment, and provide some further guidance on just how much RBA board members needed to be ‘persuaded’ to cut interest rates earlier this month,” wrote Elias Haddad, senior currency strategist at the CBA in his morning note.
“Stevens won’t volunteer that information; it will have to come in response to a question. Given the nature of the briefing, he may also refer to the low inflation environment in New Zealand, and the fact the RBNZ is cutting interest rates for the same reason – low inflation.”
Stevens will know that there’ll be plenty of focus on his speech, and may take the opportunity to coerce rate expectations one way or another.
If he does mention anything significant, Business Insider will have the details.