The Australian dollar found its footing in overnight trade, helped by modest US dollar weakness, lower US bond yields along with a rally in stocks, crude and iron ore futures.
“AUD/USD traded slightly higher in the overnight sessions, helped by strong global equity markets and higher oil prices,” said Joseph Capurso, senior currency strategist at the Commonwealth Bank.
“Market participants are more optimistic OPEC will soon reach a deal to cut oil production that will support oil prices.”
US 10-year bond yields eased two basis points to 2.33%, contributing to the US dollar index sliding by just over 0.2%.
Although spot prices continued to tumble, Chinese iron ore futures ripped higher overnight, closing with a gain of 3.4%. This suggests the rout in spot markets may be coming to an end, and likely supported the Aussie at the margin.
However, even with that long list of positive factors, the Aussie’s move had been small all things considered.
As at 7.55am AEDT, the AUD/USD currently buys .7364, up 0.44% from Friday’s closing level.
As the scoreboard shows, the Aussie has gained against most major pairs, reflective of the risk-on mood seen across financial markets.
- AUD/USD 0.7364 , 0.0032 , 0.44%
- AUD/JPY 81.72 , 0.54 , 0.67%
- AUD/CNH 5.0834 , 0.0258 , 0.51%
- AUD/EUR 0.6927 , 0.001 , 0.14%
- AUD/GBP 0.5889 , -0.0033 , -0.56%
- AUD/NZD 1.0426 , -0.001 , -0.10%
On Tuesday, as was the case on Monday, there are no major economic events scheduled across Asia, leaving speculation over the next week’s crucial OPEC meeting, along with the likely trajectory of growth and inflation in the US under a Donald Trump presidency, to dictate direction in currency markets.
Later in the session, RBA assistant governor Christopher Kent will discuss Australia’s Economic Transition at the Australian Business Economists Conference Dinner in Sydney from 6.45pm AEDT.
On the data front, US existing home sales and the Richmond Fed manufacturing survey will both be released at 2am AEDT.
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