Inspired by strong domestic economic data released yesterday, a optimistic-sounding RBA monetary policy statement, weak US manufacturing data and the prospect for a bumper Australian Q3 GDP print today, the Australian dollar has been on a tear over the past 24 hours, rallying by as much as 1.5% from Tuesday’s opening level.
As at 8.30am AEDT, the AUD/USD currently buys .7326, the highest level seen since mid-October this year.
While the Aussie was already on the March higher during yesterday’s Asian session, the pair really took off following a disappointing US manufacturing PMI survey which revealed activity contracted for the first time since mid-2009 in November.
“The overnight fall in the US ISM manufacturing index to 48.6 triggered a broad base USD sell off and provided another leg up to the AUD,” wrote Rodrigo Catril, currency strategist at the NAB in his morning note.
“The probability of a December Fed hike has now moved to 70% from 75% earlier in the week. The soft manufacturing print now raises the significance of the ISM non-manufacturing November release on Thursday ahead of the all-important nonfarm payrolls report on Friday. We would note too that overnight Fed Evans (voter, dove) admitted to ‘some nervousness’ about Dec FOMC decision.”
Looking ahead to Wednesday’s trading session, market attention will be on a speech delivered by RBA governor Glenn Stevens at 11.10am AEDT in Perth along with the release of Australian Q3 GDP that will follow soon after at 11.30am AEDT.
“Our expectations would be for the speech to cover how business surveys point to a gradual improvement in non-mining sectors, and how these improvements should support the ongoing moderate expansion in the economy in spite of the decline in capital spending in the mining sector, wrote Catril.
“However, we also know from last week’s CAPEX survey that a pickup in non-mining investment remains an elusive piece in the transition to non-mining investment led growth. So in this regard, today’s speech could be an opportunity for the governor to expand on this missing piece of the puzzle.”
Alongside governor Stevens’ speech, Australia’s Q3 GDP report will also warrant attention. According to a survey conducted by Bloomberg, quarterly growth of 0.8% is expected, leaving the annual rate at 2.4% if realised.
While still an important data release, the September quarter ended over two months ago, something that may see any initial knee-jerk reaction in the Australian dollar reverse in the latter parts of the session.
Later this evening markets will also have to digest the latest ADP national employment report from the US – market consensus looks for an increase of 188,000 – while Fed Chair Janet Yellen will speak on the US economic outlook.
Here’s the full Aussie dollar scoreboard.
- AUD/USD 0.7326 , 0.01 , 1.38%
- AUD/JPY 90.02 , 1.08 , 1.21%
- AUD/CNY 4.6875 , 0.0642 , 1.39%
- AUD/EUR 0.6893 , 0.0054 , 0.79%
- AUD/GBP 0.4857 , 0.0059 , 1.23%
- AUD/NZD 1.0967 , -0.0001 , -0.01%
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