The Australian dollar is caught in a tug-of-war between US dollar strength and higher commodity prices

Gary Wolstenholme/Redferns via Getty Images

The Australian dollar is largely unchanged this morning, caught in a tug-of-war between renewed US dollar strength and iron ore prices.

After hitting a high of .7444 in European trade on the back of higher commodity prices, the AUD/USD fell back during the US session as further strong US economic data, along with the release of the minutes of the US Federal Reserve’s November FOMC meeting, did nothing to dissuade the view that the Fed will hike interest rates in mid-December.

It currently sits at .7385 as at 7.45am in Sydney, down 0.22% for the session. However, it’s up against both the Japanese yen, New Zealand dollar and euro.

  • AUD/USD 0.7385 , -0.0016 , -0.22%
  • AUD/JPY 83.13 , 0.89 , 1.08%
  • AUD/CNH 5.1323 , 0.0179 , 0.35%
  • AUD/EUR 0.6997 , 0.0034 , 0.49%
  • AUD/GBP 0.5936 , -0.002 , -0.34%
  • AUD/NZD 1.0533 , 0.0059 , 0.56%

Turning to Thursday trade in Asia, there’s absolutely nothing on the data front that looks set to stir the Aussie. Throw in the US Thanksgiving holiday and it is expected to be a quiet session for currency markets.

“US Thanksgiving promises to make for a limp into the weekend, with little on the scheduled calendar to get anyone’s pulses racing,” said Ray Attrill, global co-head of FX strategy at the NAB.

“Oil prices will remain a point of focus as we head toward next Wednesday’s OPEC meeting. So too will USD/JPY with Tokyo returning from holiday, and in China this morning’s PBoC CNY fix will make headlines one way or the other.”

Given the strength in the US dollar index overnight — rallying to a fresh 13-year high — it suggests that the People’s Bank of China will likely set the USD/CNY mid-point higher yet again when the fixing occurs at 12.15pm AEDT.

As yet, weakness in the yuan has caused any panic in financial markets as was the case earlier this year.

Outside of movements in the yen and yuan, fluctuations in Chinese commodity futures once they begin trading at Midday AEDT may also be influential on the Aussie.

AUD/USD 5-Minute Chart

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