The Australian dollar edged lower in overnight trade, slipping back towards 73 cents on the back of renewed US dollar strength.
As opposed to previous sessions where the Aussie mirrored movements in the crude oil price, the slide came despite front-month West Texas Intermediate (WTI) futures closing at the highest level seen since early November.
Instead, Elias Haddad, currency strategist at the CBA, put the Aussie’s decline down to hawkish remarks from two voting members from the US Federal Reserve’s FOMC, indicating an increased likelihood that a further US rate hike may be closer than what markets currently expect.
“Comments from two FOMC voters supported the USD,” said Haddad in his morning Friday note. “Eric Rosengren warned that the likelihood of Fed rate hikes is higher than market pricing. Meanwhile, staunch hawk Esther George reiterated her case for higher US rates.”
On the back of the remarks, the AUD/USD closed Thursday’s session buying .7325, a decline of 0.68%.
As at 7.55am AEST, it currently buys .7318.
Outside of New Zealand retail sales which will be released at 8.45am AEST, both the domestic and regional economic calendars are devoid of market moving events on Friday, likely ensuring movements in USD/JPY, USD/CNH and crude futures will be influential on the Aussie.
Looking further ahead, the release of US retail sales data for April at 10.30pm AEST will be closely eyed by markets, and will likely generate volatility in the US dollar later in the session.
On Saturday, China is also scheduled to release industrial output, retail sales and fixed asset investment figures for April at 3.30pm AEST.
Here’s the current Aussie dollar scoreboard.
- AUD/USD 0.7318 , -0.0007 , -0.10%
- AUD/JPY 79.8 , -0.05 , -0.06%
- AUD/CNH 4.7912 , -0.0051 , -0.11%
- AUD/EUR 0.6432 , -0.0005 , -0.08%
- AUD/GBP 0.5064 , -0.0003 , -0.06%
- AUD/NZD 1.0721 , -0.0007 , -0.07%
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