The Australian dollar hit a four-month high overnight

Photo by Christopher Polk/NBC/NBC via Getty Images

The Australian dollar is almost exactly where Asia left it in early trade on Tuesday morning, trying, and failing, to break higher on several occasions in overnight trade.

Here’s the Aussie dollar scoreboard as at 7.40am AEDT.

  • AUD/USD 0.7730 , 0.0032 , 0.42%
  • AUD/JPY 86.98 , 0.32 , 0.37%
  • AUD/CNH 5.3246 , 0.0238 , 0.45%
  • AUD/EUR 0.7195 , 0.0026 , 0.36%
  • AUD/GBP 0.6254 , 0.0047 , 0.76%
  • AUD/NZD 1.0954 , -0.0009 , -0.08%

The AUD/USD traded up to as high as .7747 in European trade, leaving it at a fresh four-month high, although traders appeared reluctant to buy the break, sending the Aussie lower over the course of North American trade.

While it’s debatable as to whether it had an impact or not on the Aussie, US FOMC members Charles Evans and Patrick Harker both spoke on the outlook for US interest rates overnight, although nothing that was said would have come as earth-shattering news for traders.

“Evans said he supports two or three rate hikes this year and that inflation at 2.5% for a period of time is consistent the Fed’s inflation goal,” said David de Garis, director of economics at the National Australia Bank in his morning note.

“Patrick Harker appeared on CNBC saying that the inflation target is not a ceiling and that neither has he factored fiscal policy into his calculations.”

Harker said that he expected three hikes from the FOMC this year, including the tightening delivered last week.

The 5-minute chart below shows the price action in the AUD/USD in overnight trade.

AUD/USD 5-Minute Chart

Turning to Tuesday trade in Asia, most attention will be on the release of the minutes of the Reserve Bank of Australia’s March monetary policy meeting.

“Interest today will be the RBA Minutes of this month’s Board meeting and the focus on the still quite vibrant nature of Eastern residential property market, especially the investor market in Sydney and Melbourne,” says de Garis.

“Officials in the past 24 hours, including the Treasurer, have been offering strong hints that further measures to cool the market appear to be imminent.”

In the bank’s post-meeting statement, it said that “supervisory measures have contributed to some strengthening of lending standards”, seemingly a step back from the more confident tone expressed just one month earlier when it said “supervisory measures have strengthened lending standards and some lenders are taking a more cautious attitude to lending in certain segments”.

That tweak of language almost certainly ensures that there’ll plenty of interest on the bank’s discussion on the housing market.

Others suggest that views on the labour market, particularly continued weakness in wage costs, may also offer some interesting tidbits when the minutes are released at 11.30am AEDT.

Released at the same time, the ABS will also present its latest quarterly residential property price index. Given its for the December quarter, and that it’s now late March, it will almost certainly be overlooked by traders.

There’s nothing else of significance on the regional calendar, likely ensuring that movements in the USD/JPY, US bond yields and Chinese commodity futures will provide the most likely sources of volatility in the Aussie.

Later in the session, UK CPI for February will be released while Loretta Mester and Esther George, non-voting members on the US FOMC this year, will also be delivering speeches.

Canadian retail sales and Bank of Canada deputy governor Schembri will also be on the wires.

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