The Australian dollar found its footing on Friday, creeping higher against the US dollar after several days of losses.
Here’s the scoreboard as at 7.35am AEST.
AUD/USD 0.7562 , -0.0003 , -0.04%
AUD/JPY 84.1 , 0.08 , 0.10%
AUD/CNH 5.1693 , -0.0017 , -0.03%
AUD/EUR 0.6753 , 0.0003 , 0.04%
AUD/GBP 0.5935 , -0.0003 , -0.05%
AUD/NZD 1.0383 , -0.0002 , -0.02%
Ray Attrill, head of FX strategy at the National Australia Bank, said that the move in the Aussie was helped by broad-based US dollar weakness and firmer commodity prices.
“The dollar was weaker across the board bar against the Canadian dollar… with the US dollar index losing 0.34%,” he wrote on Monday morning.
Commodity prices were also firmer with gold, crude oil, base metals and iron ore all posting small gains during the session.
Combined, that helped the AUD/USD to a gain of 0.32% for the session.
After an incredibly quiet data calendar last week, the schedule this week is arguably quieter as we approach quarter-end, suggesting market movements will be dictaated by factors other than economic data.
To Elias Haddad, senior currency strategist at the Commonwealth Bank, US politics will likely play a large part in determining how currency markets perform this week.
“There is doubt the health-care bill unveiled by Senate Majority Leader Mitch McConnell last Thursday will have the necessary votes to pass through the Senate before the 4 July recess,” says Haddad.
“Unless these doubts abate, the USD can weaken further because failure to pass the health-care bill would lower the odds of tax reform (or tax cuts) being passed by the end of 2017.”
Hopes for wide-ranging tax reforms following the election of Donald Trump in early November last year helped drive enormous gains in the US dollar helped by a lift in US treasury yields. Those moves have subsequently been reversed in the first half of 2017, indicating that markets are increasingly sceptical that such reforms will be delivered.
On the Aussie specifically, Haddad says that it’s likely to be guided by offshore developments given a lack of local Australian economic data.
Most of the data highlights for the week will arrive on Friday, both in Australia, China and abroad.
For Monday, all of the main data points will be released in Europe and the US, although it’s debatable as to just how much impact they’ll have on market movements.
In Germany, the IFO business confidence survey for June will be released while durable goods orders, revised building permits and Dallas Fed manufacturing index will also arrive during the US session.
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