The Australian dollar put in a resilient performance on Thursday, rallying against all bar its Kiwi counterpart despite the release of strong US economic data, a lift in US bond yields, weakness in global stock markets and a slide in the iron ore price.
First, here’s the scoreboard as at 7.50am AEDT:
- AUD/USD 0.7556 , 0.0051 , 0.68%
- AUD/JPY 86.74 , 0.71 , 0.83%
- AUD/CNH 5.1737 , 0.0425 , 0.83%
- AUD/EUR 0.7086 , 0.0027 , 0.38%
- AUD/GBP 0.6127 , 0.0007 , 0.11%
- AUD/NZD 1.0512 , -0.0014 , -0.13%
As can be seen in the 5-minute tick chart below, the AUD/USD lifted in European trade, holding onto early gains throughout the US session.
Perhaps explaining the strength seen overnight, the move came before the release of major Chinese economic data, including Q4 GDP, later today.
In terms of GDP, another solid year-on-year growth rate of 6.7% is expected, unchanged from the pace reported in Q3.
Alongside the GDP report, industrial output, retail sales and urban fixed asset investment figures for December will also be released.
This 10-second guide goes into more detail as to what is is expected, including the fact that the GDP figure almost always meets or beats what is expected by financial markets.
Despite widespread scepticism over the reliability of the GDP figures, markets still tend to react to the data given it is the second-largest economy in the world behind the United States, and a fast growing one at that.
Before the Chinese data hits, Australian new home sales figures for November will also be released, but it’s unlikely to cause any meaningful reaction in the Aussie.
Janet Yellen, US Federal Reserve chair, will also speak from 12pm AEDT, although, less than a day after delivering a market moving speech in San Francisco, it’s questionable whether she’ll elaborate any further on her previous remarks.
Later in the session, market attention will switch to the inauguration of Donald Trump as the 45th president of the United States in Washington DC.
While his inauguration speech is likely to be heavily scripted, Tapas Strickland, an economist at the National Australia Bank, believes it will still be watched closely by markets.
“If Trump emphases protectionist trade policies then that could see some unwinding of the Trump rally. On the other hand, if he focuses on making ‘America great again’ through infrastructure spending then it is likely the market will react positively,” he wrote on Friday morning.
The ceremony is scheduled to start at 4am AEDT tomorrow morning.