The Australian dollar is higher due to profit-taking ahead of this week's US Fed meeting

Photo: Fred Tabbeau/ AFP/ Getty Images.

The Australian dollar lifted in overnight trade, benefiting from renewed US dollar weakness and strength in commodity prices.

“AUD/USD lifted 1.0% to a high of 0.7504, roughly equally last week’s highs as higher oil and other selected industrial commodity prices gained ground,” said Richard Grace, chief currency strategist at Commonwealth Bank.

“However, a softer USD was largely behind the lift in AUD/USD.”

As shown in the scoreboard below, the Aussie actually under-performed against the euro, UK pound and Kiwi dollar, underlining that much of the moves were driven by US dollar weakness.

  • AUD/USD 0.7490 , 0.0039 , 0.52%
  • AUD/JPY 86.1 , 0.22 , 0.26%
  • AUD/CNH 5.1868 , 0.0279 , 0.54%
  • AUD/EUR 0.7041 , -0.0015 , -0.21%
  • AUD/GBP 0.5909 , -0.0012 , -0.20%
  • AUD/NZD 1.0416 , -0.0018 , -0.17%

Grace says that profit-taking in the US dollar, US stocks and US treasuries ahead of this week’s US Federal Reserve FOMC meeting drove the overnight move.

AUD/USD Daily Chart

Turning to Tuesday trade in Asia, movement in the Aussie will also most certainly be driven by the release of key economic data out of China at 1pm AEDT.

The nation’s statistics bureau will release industrial output, urban fixed asset investment and retail sales figures for November, with year-on-year growth of 6.1%, 8.3% and 10.1% expected respectively.

These are largely unchanged from the levels seen in October, ad if there’s been a common trend in Chinese data of late, it’s beats to the upside.

Outside of the China data deluge, markets will also receive Australian business and consumer confidence figures from the NAB and Westpac during the session.

While they’re unlikely to move the Aussie, there’ll still be plenty of interest to see how sentiment was impacted, if at all, by last week’s surprise decline in Australian GDP.

Outside of data, and like Monday, movements in Chinese commodity futures are also likely to be influential on the Aussie once trade gets underway at Midday AEDT.

Later in the session, there’ll be inflation figures released in Germany and the UK, Eurozone unemployment and German investor sentiment in the monthly ZEW survey.

None appear likely the Australian dollar.

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