The Australian dollar rose on Monday, supported by strength in bulk and base commodity prices and renewed weakness in the US dollar.
First, here’s the scoreboard as at 7.40am AEDT.
- AUD/USD 0.7355 , 0.0064 , 0.88%
- AUD/JPY 85.35 , 0.14 , 0.16%
- AUD/CNH 5.0594 , 0.067 , 1.34%
- AUD/EUR 0.6959 , 0.0046 , 0.67%
- AUD/GBP 0.6049 , 0.0121 , 2.04%
- AUD/NZD 1.0482 , 0.0011 , 0.11%
After pushing back above the 73 cent level in Asia, the AUD/USD gains extended into European and North American trade, supported by a decline in US bond yields which weighed on the US dollar.
In the absence of hard economic data, the decline in US bond yields may have been due to a slide in crude oil futures which fell 4% on renewed concern over a potential lift in US crude output.
The Aussie also benefited from strength in Chinese commodity futures with iron ore and coking coal — Australia’s largest goods exports by dollar value — surging by 4.73% and 4.34% in overnight trade.
That saw the AUD/USD jump to as high as .7373 at one point during the session, the highest level seen since December 15.
Turning to Tuesday trade in Asia, economic data from both Australian and China will be on the radar of investors.
In Australia, retail sales for November will be released at 11.30am AEDT with economists looking for an increase of 0.4% following a gain of 0.5% in October.
Given strength in online retail sales and economy-wide spending in the Commonwealth Bank’s Business Sales Index Index over the same period, it suggests that the risks for today’s report may be skewed to the upside.
Outside of Australia, markets will also be watching the release of Chinese consumer and producer price inflation figures for December at 12.30pm AEDT.
Economists expect CPI to increase by 2.3% from a year earlier, unchanged from the rate reported in November, while PPI is tipped to accelerate to 4.5% from 3.3% on the back of higher commodity prices.
Outside of economic data, movements in the offshore traded yuan, or CNH, will likely be influential on the Aussie on Tuesday. It certainly has been in prior sessions.
While there is a smattering of economic data releases scheduled this evening in Europe and the US, none appears likely to cause a substantial move in the Aussie one way or another, at least on face value.
If anything, broader market moves may be dictated by the release of the latest short-term energy outlook from the US Energy Information Administration (EIA), a release that will likely garner more interest than usual given recent developments in the crude market.