The Australian dollar has entered a holding pattern as traders eye bigger events ahead

Simon Bruty/Allsport

The Australian dollar held comfortably above the US 79 cent level overnight, essentially entering a holding pattern ahead of key market-moving events that will arrive over the next 48 hours.

Here’s the Aussie scoreboard just before 7am AEST.

AUD/USD 0.7922 , 0.0011 , 0.14%
AUD/JPY 88.01 , 0.17 , 0.19%
AUD/CNH 5.3449 , 0.0025 , 0.05%
AUD/EUR 0.6804 , 0.0029 , 0.43%
AUD/GBP 0.6079 , -0.0006 , -0.10%
AUD/NZD 1.0644 , 0.0045 , 0.42%
AUD/CAD 0.9906 , -0.0014 , -0.14%

The AUD/USD had a Topsy-Turvy session, rallying to as high as .7968 during European trade before giving back much of its gains in US trade.

As seen in the 5-minute chart below, the Aussie jumped out of the blocks at the start of trade in European stocks, perhaps assisted by the news that IMF had upgraded its GDP growth forecasts for the Chinese economy both for this year and next.

A weaker-than-expected composite PMI print from the Eurozone, along with strength in crude oil futures and iron ore spot markets, may have also contributed to Aussie’s probe higher.

However, after testing the willingness of sellers for most of the European trade, the Aussie gave back ground later in the session on the back of reasonable economic data from the US and a reduction in US political concerns.

That helped to lift US bond yields, and with it the US dollar.

In the end the Aussie finished with modest gains against the greenback but was mixed against the crosses.

From a broader perspective, Richard Grace, chief currency strategist at the Commonwealth Bank, says the buoyancy in the Aussie — coming despite the best efforts from RBA policymakers to talk it lower isn’t all that surprising given strengthening global economic conditions.

“AUD remains well-supported, which is typically when the global economy is expanding firmly, as is the case now,” he said in his Tuesday morning note.

AUD/USD 5-Minute Chart

As was the case on Monday, there is very little on the economic radar today that appears likely to move the Aussie significantly one way or another.

Traders are understandably waiting the release of Australian CPI and a speech from RBA governor Philip Lowe on Wednesday, along with the US Federal Reserve’s July monetary policy decision that will arrive in the early hours of Thursday morning along Australia’s east coast, before deciding which direction to push the Aussie next.

That means that another range-bound day looks set to prevail today with oscillations in the USD/JPY — often influential on the US dollar index in Asia — along with those in Chinese commodity futures, appearing the most likely catalysts to generate any volatility in the Aussie.

For those desperate for some market action, there is a smattering of economic data out today, although none appears likely to generate much interest given the economic events that lie ahead.

In Australia, the latest ANZ-Roy Morgan consumer confidence report will be released while in Europe business sentiment from Germany and France, along with industrial data from the UK and Italy, will also be on tap.

In the states, markets will also receive house price data, consumer confidence data along with the Richmond Fed’s manufacturing index.