The Australian dollar is ratcheting higher as commodity prices continue to surge

Go on, look down. Picture: The North Face/YouTube

The Australian dollar continued to ratchet higher on Monday, briefly flirting with the 75 cent level before pulling back in recent trade.

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

  • AUD/USD 0.7476 , 0.0046 , 0.62%
  • AUD/JPY 83.81 , -0.18 , -0.21%
  • AUD/CNH 5.1812 , 0.0214 , 0.41%
  • AUD/EUR 0.7050 , 0.0042 , 0.60%
  • AUD/GBP 0.6024 , 0.0067 , 1.12%
  • AUD/NZD 1.0571 , 0.0023 , 0.22%

Richard Grace, chief currency strategist at the Commonwealth Bank, put the resilient performance from the Aussie down to continued strength in commodity markets.

“AUD/USD has lifted to a high of 0.7494 in overnight trade, assisted by a lift in commodity prices,” he says.

“Iron ore, base metal and oil prices all put on solid gains”.

Underlining just how remarkable the rally across the base and bulk commodities complex has been, Grace notes that the Bloomberg Industrial Metals index had its strongest five-day increase since 2011 over the past week.

Remarkable.

No wonder the Aussie is up 2.5% against the US dollar over that period despite relentless strength in the latter.

As was the case on Monday, there’s very little on the economic data front on Tuesday that looks likely to dictate direction in the Aussie.

Domestically, the weekly ANZ-Roy Morgan consumer confidence index will be released at 9.30am AEDT.

Regionally, Japanese retail sales, household spending and unemployment data will be released, although it’s unlikely to draw a reaction from markets, despite being regarded as top-tier releases in other major economies.

With nothing on the economic radar, the Aussie will likely take its direction from movements in the USD/JPY and USD/CNY, as well as commodity and crude futures.

As shown in the chart below, the largest move in the Aussie in Asia on Monday came with the opening of mainland Chinese markets.

Later in the session, markets will receive the second estimate of US Q2 GDP along with US consumer confidence for November.

With markets certain that the Fed will hike interest rates in December, it would take an ugly set of numbers to derive any serious movement in currency markets.

AUD/USD 5-Minute Chart

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