The Australian dollar has gone from a multi-month low to a multi-week high in the blink of an eye

It’s been almost as fast as Daniel Ricciardo. Photo by Clive Mason/Getty Images

What a whirlwind week it’s been for the Australian dollar.

After threatening to break below key technical support on Monday, the Aussie has surged higher in recent days, rallying over 2% against the US dollar.

As seen in the 4-hourly chart below, the AUD/USD has gone from a multi-month low to a multi-week high in the blink of an eye.

AUD/USD 4-Hour Chart

After pushing higher on Wednesday on the back of a weak US consumer price inflation report and updated FOMC forecasts that were perceived to be more dovish than what markets expected, the Aussie continued to rally on Thursday, propelled northwards by another stellar Australian jobs report for November and solid economic data from China.

The Aussie was also immune to the release of strong US retail sales, manufacturing PMI and import price figures for November during the session, showing little reaction to data. This may reflect renewed concern that Senate Republicans may not have the numbers to pass tax reforms, something that kept the dollar’s gains in check on Thursday.

“A spokeswoman for Republican Senator Rubio told Senate leaders that he will vote against the GOP Tax unless child-tax is expanded for working-poor families,” said Rodrigo Catril, currency strategist at the National Australia Bank.

“Meanwhile Senator Mccain is back in hospital and US Republicans can only afford to lose two votes if they want to pass the US tax legislation.

“A vote is still expected early next week.”

As seen in the scoreboard below at 8am AEDT, the Aussie rallied not only against the greenback but all major crosses on Thursday.

AUD/USD 0.7672 , 0.0036 , 0.47%
AUD/JPY 86.12 , 0.19 , 0.22%
AUD/CNH 5.0688 , 0.0194 , 0.38%
AUD/EUR 0.6507 , 0.0051 , 0.79%
AUD/GBP 0.5713 , 0.0024 , 0.42%
AUD/NZD 1.0974 , 0.0104 , 0.96%
AUD/CAD 0.9784 , -0.0001 , -0.01%

In particular, the Aussie rallied hard against the euro despite the release of upgraded GDP growth and inflation figures from the ECB following the conclusion of its December monetary policy reading.

“The main reason for the lower EUR was because despite some significant upward revisions to the ECB’s Eurozone GDP growth forecasts, the inflation forecasts were only lifted modestly, and the ECB’s 2% inflation target is not reached in the new forecast horizon, which now includes 2020,” said Richard Grace, Chief Currency Strategist at the Commonwealth Bank.

Against the Canadian dollar, however, the Aussie is currently trading flat following a hawkish speech from Bank of Canada Governor Stephen Poloz delivered earlier in the session.

Turning to the day ahead, there’s nothing on the calendar that appears likely to move the Aussie significantly in one direction or the other.

There’s nothing scheduled in Australia while the only major release in Asia the Bank of Japan’s quarterly Tankan survey. It rarely moves financial markets, and that trend appears certain to remain in place today.

Later in the session, data highlights include trade data from the Eurozone along with the Empire State Manufacturing Index and industrial production figures from the US.

Given the slow end to the week, and the close proximity to Christmas, it appears likely to be a quiet session in the absence of any unexpected news.

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