The Australian dollar is going nowhere

Photo by R. Wesley/Fox Photos/Getty Images

The Australian dollar is trading fractionally higher this morning, recovering after hitting a low of .7552 in overnight trade.

First, here’s the scoreboard:

  • AUD/USD 0.7583 , 0 , 0.00%
  • AUD/JPY 85.81 , 0.28 , 0.33%
  • AUD/CNH 5.1793 , 0.0034 , 0.07%
  • AUD/EUR 0.7042 , 0.0021 , 0.30%
  • AUD/GBP 0.5988 , -0.0039 , -0.65%
  • AUD/NZD 1.0418 , 0.0054 , 0.52%

And here’s the AUD/USD 5-minute chart:

Having recovered in European trade, the Aussie came under renewed selling pressure in North American trade following the release of strong US economic data earlier in the session.

The ISM manufacturing PMI gauge rose to a more than two-year high of 56.0 while the ADP national employment report revealed an increase in private sector payrolls of 246,000 in January, well ahead of the 165,000 gain expected.

That suggests that not only is another bumper US non-farm payrolls report likely this Friday, but that economic conditions in the US continue to strengthen.

However, having pushed both US bond yields and US dollar higher, those moves were completely unwound following the release of the US Federal Reserve’s February monetary policy decision later in the session.

The Fed remained cautions on the outlook for inflation, and provided no hint that another rate cut would be forthcoming at its next meeting in March, disappointing some investors.

That saw US yields fall, with the US dollar following suit.

Turning to Thursday trade in Asia, markets will receive trade and building approvals from Australia, and both have the potential to move the Aussie in either direction, particularly the former.

Australia’s trade surplus is expected to balloon to $2.2 billion in December, up from $1.243 billion in November. If correct, it would mark the largest trade surplus since February 2009. There’s even some chatter that a fresh record could be set today, powered by soaring commodity prices and an uplift in export volumes.

Elsewhere, building approvals are tipped to decline by 2% in December, following a 7% increase in November.

Outside of Australia’s data releases, the calendar in the rest of Asia is quiet, likely ensuring that movements in the USD/JPY will remain influential on broader currency markets during the session.

Later today, the Bank of England’s monetary policy committee will deliver its February policy meeting — no change is expected — while in the US weekly jobless claims, productivity and labour cost data for Q4 2016 and the Empire State manufacturing index for January will also be released.

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