The Australian dollar rose modestly to start the week, climbing as it so often does in thin, holiday impacted trade.
According to Ray Attrill, global co-head of FX strategy at the NAB, the strength in the Aussie was almost entirely due to broad-based US dollar weakness following less-than-stellar US economic data released overnight.
“The Atlanta Fed has just published its latest ‘GDP Now’ estimate of first quarter growth, which has been chopped to a dismal 0.6% from 1.4%,” wrote Attrill in his morning note. “This follows the release of the February data on personal income and spending, the main feature of which was a big downward revision to the January spending figures (from 0.5% to 0.1% in nominal terms, and from 0.4% to 0.0% in real terms). As a result, the Atlanta Fed has knocked down its Q1 real consumer spending estimate to 1.8% from 2.5%.”
In unison with a weaker-than-expected core PCE inflation figure for February and an upcoming speech from US Federal Reserve chair Janet Yellen this evening, it was enough to weigh on the US dollar, hence helping to strengthen the Aussie by default.
As at 8.40am AEDT, the AUD/USD buys 0.7536, up 0.37% on last Friday’s closing level.
According to Elias Haddad, FX strategist at the CBA, the pattern seen on Monday will likely continue in the days ahead.
“AUD/USD has scope to edge higher this week on a softer USD,” says Haddad. “Also, we expect a modest improvement in China’s March manufacturing PMI (Fri) after the Chinese Lunar New Year.
Haddad notes that the domestic data calendar is light this week, ensuring investor sentiment will likely dictate the Aussie’s direction.
Looking ahead to Tuesday’s trading session, there are no key domestic data reports scheduled for release. Regionally, Japanese unemployment, household spending and retail sales figures may generate some short-term volatility, particularly in the yen crosses.
Here’s the current Aussie dollar scoreboard.
- AUD/USD 0.7536 , -0.0007 , -0.09%
- AUD/JPY 85.47 , -0.09 , -0.11%
- AUD/CNY 4.9103 , -0.005 , -0.10%
- AUD/EUR 0.6730 , -0.0006 , -0.09%
- AUD/GBP 0.5285 , -0.0006 , -0.11%
- AUD/NZD 1.1208 , -0.0007 , -0.06%