The Australian dollar continued to grind higher overnight, finding support from a reversal in the US dollar, firmer commodity prices and resilient investor sentiment.
Here’s the scoreboard as at 7.40am AEDT:
- AUD/USD 0.7472 , 0.0012 , 0.16%
- AUD/JPY 84.95 , 0.45 , 0.53%
- AUD/CNH 5.1232 , 0.007 , 0.14%
- AUD/EUR 0.6941 , -0.0029 , -0.42%
- AUD/GBP 0.5874 , 0.0026 , 0.44%
- AUD/NZD 1.0471 , 0.0047 , 0.45%
At one point the AUD/USD rose to as high as .7497 before reversing later in the session.
Much of the moves were influenced by the euro — a substantial component within the US dollar index — with initial weakness in common currency following the Italian referendum reversing over European and North American trade.
The EUR/USD currently buys 1.0762, having fallen to as low as 1.0508 in Asia.
That lead to a reversal in the US dollar, underpinning the Aussie’s gains.
The move in the US dollar came despite the release of some incredibly strong service sector data from the US earlier in the session that all but sealed the case for a rate hike from the US Federal Reserve next week.
Turning to Tuesday’s session in Asia, movements in the Aussie will be dictated by a series of GDP inputs released at 11.30am AEDT, along with the Reserve Bank of Australia’s monetary policy announcement at 2.30pm AEDT.
Coming one day ahead of the release of Australia’s Q3 GDP report, markets will receive net export contribution, government expenditure and current account figures for the September quarter.
These figures will feed into GDP, and could potentially see current expectations for a weak growth quarter shift dramatically in either direction. They certainly have in the past.
Later in the session, all focus will be in the RBA’s eleventh and final monetary policy meeting for the year.
While no one expects rates will move, there’ll be plenty of interest in the wording of the accompanying monetary policy statement, particularly relating to the inflation outlook, housing and labour markets.
It’s widely expected that the board will maintain its neutral bias in the final paragraph of the statement.
In European and North American trade, there’s some major data released although they appear unlikely to leave a lasting impact on financial markets.
Most of the action is in the US will the release of trade and factory orders.