The Australian dollar is gaining ahead of swathe of key central bank speeches

Photo by Mark Wilson/Getty Images

The Australian dollar edged higher in overnight trade, seemingly immune to another bout of US dollar strength that came despite the release of weak US economic data during the session.

Here’s the scoreboard as at 7.40am AEST.

AUD/USD 0.7581 , -0.0001 , -0.01%
AUD/JPY 84.79 , 0.00 , 0.00%
AUD/CNH 5.1969 , -0.0024 , -0.05%
AUD/EUR 0.6778 , -0.0001 , -0.01%
AUD/GBP 0.5959 , -0.0001 , -0.02%
AUD/NZD 1.0398 , 0.0003 , 0.03%

Not only did the Aussie gain against the greenback, but also the major crosses as well.

Richard Grace, chief currency strategist at the Commonwealth Bank, put the Aussie’s resilience down to higher commodity prices during the session.

“AUD/USD has lifted 0.5% from Monday’s Asian open, and is currently trading 0.7585,” he wrote on Tuesday morning. “Iron ore and oil prices were higher in overnight trade, with base metal prices flat.”

The Aussie may have also benefited from the release of further weak US economic data, something that briefly saw it test 76 cents before giving back ground in North American trade.

AUD/USD 5-Minute Chart

The late strength in the US dollar came despite release of weak durable goods orders and Chicago Fed national activity index during the session, resulting in the US economic surprise index falling to the lowest level since early 2015.

The US dollar may have found support from hawkish remarks from several leading US Federal Reserve officials over the past 24 hours.

Bill Dudley, New York Fed president, said that US financial conditions had eased in recent months and that should be a consideration on the outlook for monetary policy.

“When financial conditions ease, as has been the case recently, this can provide additional impetus for the decision to continue to remove monetary policy accommodation,” he said.

John Williams, San Francisco Fed president, told an audience in Sydney said he sees the Fed hitting its 2% inflation target next year, adding that he was in favour of further gradual rate rises and a normalisation of the Fed’s balance sheet.

Williams will also speak again in late Asian trade on Tuesday, followed by US Fed chair Janet Yellen in London later in the session.

That pretty much reflects the tone of the session with speeches from policymakers, rather than hard data, likely to dictate market direction.

The World Economic Forum’s annual “New Champions” forum in the Chinese port city of Dalian will be attended by Chinese premier Li Keqiang and Russian economy minister Maxim Oreshkin. That will be followed later in the session by a speech from ECB president Mario Draghi.

ECB members Coeure and Praet will also speak at the ECB event held in Sintra, Portugal, while US FOMC members Harker and Kashkari will also be in action.

Of what data there is, it appears unlikely to move the Aussie significantly during the session.

The ABS will release further data from Australia’s 2016 census while in the US house price data and consumer confidence figures are also on tap.

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