The Australian dollar is climbing ahead of a swathe of major data releases

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The Australian dollar continued to climb on Thursday, underpinned by strength in commodity prices and a stronger-than-expected Australian housing finance report for August released during the session.

Here’s the scoreboard as at 7.45am AEDT.

AUD/USD 0.7819 , 0.0032 , 0.41%
AUD/JPY 87.78 , 0.19 , 0.22%
AUD/CNH 5.1429 , 0.0242 , 0.47%
AUD/EUR 0.6607 , 0.0042 , 0.64%
AUD/GBP 0.5892 , 0.0004 , 0.07%
AUD/NZD 1.0963 , -0.0025 , -0.23%
AUD/CAD 0.9756 , 0.0058 , 0.60%

After starting the session at .7787, the AUD/USD climbed over the course of Asian trade, busting above Wednesday’s high of .7809 in thin trade during the Tokyo lunch break. It consolidated on those gains during European and US trade, seeing it hit a high of .7835 before easing in recent trade.

A small selloff in US stocks, along with a hotter-than-expected producer price inflation report for August, helped to trim some of the Aussie’s earlier gains that were fuelled by strength in base and bulk commodity prices.

AUD/USD Hourly Chart

Against the crosses, the Aussie put in a mixed performance, rallying against the euro but losing ground against the Kiwi.

The weakness in the euro was put down to ongoing political uncertainty in Spain.

“The Spanish government set a deadline of Monday for the Catalan administration to outline whether the Catalans have declared independence from Spain,” said Joseph Capurso, senior currency strategist at the Commonwealth Bank.

The Aussie also had a wild rise against the British pound, giving back most of its earlier gains on positive signals on Brexit negotiations.

“[The pound surged] after positive comments from the EU’s chief Brexit negotiator Michel Barnier,” says Capurso. “Barnier indicated the EU would offer the UK a two-year transition deal to stay in the EU market if the UK fulfil certain criteria.”

Turning to the day ahead, there’s plenty of market moving events on the way for traders to digest.

Domestically, the Reserve Bank of Australia (RBA) will release its semi-annual Financial Stability Review at 11.30am AEDT. There’s likely to be plenty of interest in what the bank says in relation to Australia’s housing market given mixed signals received in recent days.

Outside of Australia, the other big event in Asia will be the release of Chinese trade data for September.

According to economists, exports are expected to have risen 8.8% over the year, up from 5.5% in August. Imports are tipped to have grown 13.5% over the same period, up fractionally on the 13.3% pace reported previously.

“China’s trade numbers are far from the most sensitive prints for the AUD but can add a measure of support or a mild headwind if there’s a material out-performance or miss,” says David de Garis, economist at the National Australia Bank.

De Garis notes that higher numbers are “generally positive for the Aussie”.

If the recent trend in Chinese data is maintained, it’s likely that the risks to today’s figures will be to the upside.

Later in the session, the data calendar reaches its crescendo with the release of US inflation and retail sales figures for September at 11.30pm AEDT.

Core CPI is tipped to increase 0.2%, leaving the increase on a year earlier at 1.8%. CPI previously grew 1.7% in the 12 months to August.

As for retail sales, they’re tipped to surge 1.7% on the back of gasoline sales, recovering from a 0.2% slump in August.

Core sales, excluding gas and auto sales, are expected to increase 0.4% while the retail control group — closely aligned with US household spending in GDP — is also seen increasing 0.4%.

Given the weather disruptions seen during the month, there’s a high degree of uncertainty as to how the retail sales report will print.

Outside of those headline grabbers, markets will also receive business inventories and the preliminary reading of the University of Michigan consumer sentiment survey in the US. Elsewhere other data highlights include final inflation figures for September from Germany and Italy,

De Garis at the NAB also notes that there’s a plethora of central bank policymakers who also scheduled to speak.

“There’s another slug of central bank speakers tonight — 13 by my reckoning — including central bank heads Yellen, Kuroda, Zhou, and Patel on panels,” he says.

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