The Australian dollar is higher as the selloff in the greenback gathers pace

Mark Nolan/Getty Images

The Australian dollar continued to edge higher overnight, hitting a session high of .7437 before giving back some of those gains later in the session.

The Aussie benefited from a renewed bout of US dollar weakness with the narrow US dollar index (DXY) tumbling to a low of 98.08, the weakest level seen since last November’s US presidential election.

While some put the ongoing weakness down to mixed US economic data, Elias Haddad, senior currency strategist at the Commonwealth Bank, said the move was likely driven by increased doubts that US president Donald Trump will be able to deliver on his pre-election promises.

“USD fell across the board — mostly versus EUR — to near a six-month low, retracing almost all of its post-Trump election gains,” he said.

“Growing doubts about the Trump administration’s ability to pass an aggressive fiscal stimulus package through the US Congress anytime soon undermined USD.”

That benefited the Aussie dollar, seeing the AUD/USD close the session modestly higher at .7426.

However, the Aussie struggled against the crosses, particularly the euro which jumped to as high as 1.1097 against the US dollar, leaving it sitting at the highest level since November 9.

Here’s the current Aussie dollar scoreboard as at 7.40am AEST.

AUD/USD 0.7424 , -0.0002 , -0.03%
AUD/JPY 83.94 , -0.06 , -0.07%
AUD/CNH 5.1029 , -0.0026 , -0.05%
AUD/EUR 0.6698 , -0.0002 , -0.03%
AUD/GBP 0.5747 , -0.0001 , -0.02%
AUD/NZD 1.0777 , -0.0009 , -0.08%

Turning to Wednesday trade in Asia, there’s a couple of interesting Australian data releases that have the potential to move the Aussie.

At 10.30am AEST, Westpac will release its consumer sentiment report for May, a release that may get more attention than usual given the separate ANZ-Roy Morgan consumer confidence index fell to a 20-month low last week.

One hour later the ABS will release its wage price index for the March quarter. An increase of 0.5% is expected, leaving the year-on-year change at 1.9%. If that eventuates, it will mean that wage growth went backwards over the past year given consumer price inflation rose by 2.1% over the same period.

Combined, the reports will provide some clues on the outlook for household consumption in the period ahead.

Outside of those releases, the regional calendar is devoid of market-moving events, likely ensuring that movements in US treasury yields, Chinese commodity futures and in the USD/JPY — often influential on the US dolar index in Asia — will prove influential yet again.

Later in the session, markets will receive unemployment data from the UK, the final inflation read for April from the Eurozone, along with weekly US crude inventory data from the EIA.

Here’s the AUD/USD hourly chart:

AUD/USD Hourly Chart

And here’s the AUD/EUR daily chart, revealing the Aussie fell to the lowest level since mid-September 2016 overnight:

AUD/EUR Daily Chart

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