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The Australian dollar is continuing to grind higher

MIGUEL MEDINA/AFP/Getty Images

The Australian dollar continued to grind higher on Wednesday, boosted by further gains in stocks, strong economic data from the Europe and broad-based weakness in the US dollar.

Here’s the scoreboard as at 7.55am AEDT.

  • AUD/USD 0.7279 , 0.0055 , 0.76%
  • AUD/JPY 85.44 , 0.38 , 0.45%
  • AUD/CNH 5.0004 , -0.0261 , -0.52%
  • AUD/EUR 0.6942 , 0.0001 , 0.01%
  • AUD/GBP 0.5906 , 0.0005 , 0.08%
  • AUD/NZD 1.0454 , 0.0013 , 0.12%

After trading in a thin range between .7192 to .7241 in Asia, the AUD/USD spiked in early European trade, rising to as high as .7284 following the release of strong services PMI and inflation figures from the Eurozone.

The figures followed a strong global manufacturing PMI report for December released earlier in the session, helping to boost optimism over a recovery in the global economy.

As a well known commodity-linked risk proxy that’s closely tied to the performance of the global economy, the Aussie understandably benefited.

Along with ongoing strength in global economic data, the Aussie was also supported by a rebound in the offshore traded Chinese yuan, or CNH. It rallied by more than 1% on Wednesday against the US dollar, leaving it sitting at the highest level seen since December 6.

The move corresponded with reports that Chinese regulators were considering additional measures to stymie capital outflows from the country, including additional sales of US treasuries to support the yuan.

The minutes of the US Federal Reserve’s December FOMC meeting were also released during the session, although they had a negligible impact on markets, including the Australian dollar.

AUD/USD Hourly Chart

Looking ahead to Thursday’s trading session in Asia, there’s few economic releases or events that appear likely to shape direction for the Aussie.

In Australia, the latest services performance of services index (PSI) for December will be released by the Ai Group at 9.30am AEDT, while the Caixin-Markit China services PMI report for December is scheduled to arrive at 12.45pm AEDT.

Later in the session, non-manufacturing PMI, weekly jobless claims and monthly ADP National Employment report will be released in the US.

Markets will be watching both the ADP report and employment measure in the ISM survey for clues as to how strong the US non-farm payrolls report for December will be when it is released on Friday evening in Australia.

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