The Australian dollar hits a 3-month high ahead of the RBA's meeting with politicians

Photo by Mark Metcalfe/Getty Images

The Australian dollar hit the highest level since mid-November overnight, boosted by renewed US dollar weakness.

And that came despite disappointing Australian economic data released over the past two days, along with some sharp declines in industrial and bulk commodity prices including iron ore overnight — Australia’s largest goods export by dollar value.

We said the Aussie dollar was looking resilient earlier this week, and the form seen over the past 24 hours does little to diminish that view.

Here’s the scoreboard as at 7.55am AEDT.

  • AUD/USD 0.7711 , 0.0009 , 0.12%
  • AUD/JPY 86.9 , -0.34 , -0.39%
  • AUD/CNH 5.2803 , -0.0009 , -0.02%
  • AUD/EUR 0.7286 , -0.001 , -0.14%
  • AUD/GBP 0.6145 , -0.004 , -0.65%
  • AUD/NZD 1.0668 , -0.0041 , -0.38%

According to Joseph Capurso, senior currency strategist at the Commonwealth Bank, the Aussie was propelled higher overnight following remarks from US treasury secretary Steve Mnuchin.

“USD and US yields eased overnight,” he said on Friday morning. “Participants were disappointed by comments (from Mnuchin) that the effect on the US economy of the upcoming fiscal stimulus will be limited in 2017.”

That was enough to see the AUD/USD hit a high of .7741 briefly overnight, although it’s given back some of those gains in recent trade.

AUD/USD Daily Chart

Whether the Aussie can maintain its resilient performance on Friday will largely be determined by RBA governor Philip Lowe who will appear before the House of Representatives Standing Committee on Economics from 9.30am AEDT.

“His big picture macro points will no doubt speak to the Bank’s unwillingness at present to push harder on reducing unemployment and getting inflation back into the target band given concerns that another rate cut would only further enlarge an already high level of household debt and that the labour market is relatively stable,” says David de Garis, director of economics at the National Australia Bank.

“You’d be surprised if there wasn’t a lot of parliamentary interest in the Bank’s monitoring and assessment of offshore events, including not only in the US, but also in Europe and elsewhere and of course views on the level of the AUD,” he adds.

After Lowe’s appearance, there’s little on the economic calendar that appears likely to create volatility in the Aussie.

US new home prices and the final release of the University of Michigan consumer sentiment survey for February will be released alongside Canadian CPI.

Elsewhere there’s nothing to note, suggesting that polls and politics will continue to dominate market movements if and when they arrive.

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