The Australian dollar is grinding higher as commodity prices surge


The Australian dollar is looking firm in early Asian trade on Wednesday, benefiting from some enormous gains in commodity markets — particularly for iron ore, Australia’s largest goods export by dollar value — and ongoing strength in stocks.

First, the scoreboard as at 8.10am AEDT:

  • AUD/USD 0.7402 , 0.0038 , 0.52%
  • AUD/JPY 82.16 , 0.57 , 0.70%
  • AUD/CNH 5.1160 , 0.0333 , 0.66%
  • AUD/EUR 0.6965 , 0.0039 , 0.56%
  • AUD/GBP 0.5958 , 0.0065 , 1.10%
  • AUD/NZD 1.0480 , 0.0061 , 0.59%

While the Aussie has benefited recently from a rebound in commodity prices, helping it to recover from the lows seen late last week, it’s movements on Wednesday are likely to be dictated by a raft of important economic data, particularly from the US.

“There are some reasonably meaty data and other events coming up over the next 24 hours or so,” said David de Garis, senior economist at the National Australia Bank.

In Australia, de Garis says that there’s likely to be some passing interest in Australia’s Q3 construction work done report that will be released at 11.30am AEDT.

It’s a partial GDP input.

“NAB and the market look for the read to be dominated by a further decline major resource project pending, a decline of 1.6% picked for the quarter,” he says.

“All of this pretty much feeds into different GDP slots as it includes the initial estimates of dwelling investment, public sector building, non-residential building and resource-dominated engineering construction.”

Beyond that release, traders will also receive flash manufacturing PMI reports from the Eurozone later in the session — recently they’ve been improving, helping the recovery in commodity prices — while in the US there’a a swathe of important data releases scheduled including durable goods orders, house prices and weekly initial jobless claims.

On Tuesday US existing home sales rose to an annual pace of 5.6 million, the highest level seen in over nine years.

Should the US data continue in that vein, it will almost certainly see the odds of additional rate cuts from the Fed firm, but also help to lift US bond yields, the major driving force behind the US dollar rally seen of late.

AUD/USD Hourly Chart

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