The Australian dollar remained under pressure in overnight trade, undermined by a wave of investor caution that swept across financial markets.
Here’s the scoreboard as at 7.50am AEDT:
- AUD/USD 0.7656 , -0.0027 , -0.35%
- AUD/JPY 85.49 , -0.60 , -0.70%
- AUD/CNH 5.2060 , -0.0071 , -0.14%
- AUD/EUR 0.7119 , 0.0012 , 0.17%
- AUD/GBP 0.6140 , 0.0005 , 0.08%
- AUD/NZD 1.0452 , -0.0029 , -0.28%
In the absence of any meaningful economic data, David de Garis, director of economics at the National Australia Bank, put deterioration in investor sentiment down to renewed political concerns, particularly in Europe and the US.
“There’s been a focus on the upcoming French Presidential elections, ECB President Draghi has been batting back criticism from across the Atlantic on currency manipulation, US markets fretting about the extent of timing of Trump reflation, not to mention ongoing tweets,” de Garis mused in his Tuesday morning note.
The slide in the AUD/USD and AUD/JPY reflects the risk-off tone seen during the session. Weaker commodity prices, along with strength in US treasuries — something that has acted to weaken the US dollar in recent months — only added to the gloomy mood.
As a result, the AUD/USD struggled to find direction overnight, sliding to as low as .7630 at one point before recovering in the latter parts of trade.
Whether that trend continues on Tuesday will likely be determined by the Reserve Bank of Australia’s (RBA) first interest rate decision of the year, scheduled for release at 2.30pm AEDT.
While almost no one thinks that the RBA will adjust rates, there’s likely to be plenty of attention on the accompanying monetary policy statement, particularly as it’s been two months since we’ve heard from the RBA board.
This 10-second guide has more information on what to expect from the statement.
Outside of the RBA rate decision, markets will also receive the latest ANZ-Roy Morgan Australia weekly consumer confidence survey at 9.30am AEDT while China is also scheduled to release updated FX reserves data for January at some point during the session.
Philadelphia Fed President Patrick Harker, a FOMC voter this year and a noted policy hawk, will also speak from 8.30am AEDT.
Later in the session, and much like Monday, there’s little in the way of market moving data scheduled in Europe or North America.
German industrial production, UK Halifax house prices and the JOLTs Job Openings report in the US are the only releases of note.
That suggests that sentiment will yet again prove to be a powerful influence on market movements over the next 24 hours.