The Australian dollar is in demand

Photo: Mark Dadswell/ Getty.

The Australian dollar has opened the new trading week higher, boosted by further strength in commodity prices and expectations for a shallow, elongated rate hiking cycle from the US Federal Reserve.

The AUD/USD currently buys .7616, up 0.08% from Friday’s closing level of .7611.

It has now gained 1.5% from the low of .7504 seen on Thursday.

Along with gains in commodity markets and stocks, Elias Haddad, senior currency strategist at the Commonwealth Bank, suggested that the Aussie’s ascent was assisted by remarks from US Federal Reserve chair, Janet Yellen, along with a disappointing US retail sales report for September.

“FOMC Chair Janet Yellen suggested that letting the economy run hot temporarily could reverse the damage of the 2008-09 great recession,” said Haddad in his morning note.

According to Haddad, Yellen’s comments and a disappointing increase in the September US retail sales control group “reinforce our view that the Fed’s normalisation process will be gradual which limits significant USD upside”.

Making the strength in the Aussie all the more impressive, it came despite US 10-year bond yields surging to as high as 1.803%, a level not seen since early June.

AUD/USD Hourly Chart

Looking ahead to Monday trade in Asia, there is no data or events scheduled that appear likely to move the Aussie in any one particular direction.

The performance of stocks, crude oil futures and both the USD/CNY and USD/JPY will likely be influential on movements in the US dollar in Asia, and as a consequence the Aussie.

Later in the session, markets will receive industrial output and NY Fed manufacturing index from the US along with the final release of eurozone inflation for September.

Here’s the Aussie scoreboard as at 7.50am AEDT:

  • AUD/USD 0.7616 , 0.0005 , 0.07%
  • AUD/JPY 79.47 , 0.19 , 0.24%
  • AUD/CNH 5.1302 , 0.0014 , 0.03%
  • AUD/EUR 0.6943 , 0.0008 , 0.12%
  • AUD/GBP 0.6266 , 0.0023 , 0.37%
  • AUD/NZD 1.0728 , -0.0011 , -0.10%

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