The Australian dollar is tumbling

Photo by Scott Barbour/Getty Images

The Australian dollar fell sharply in overnight trade, losing substantial ground against both the US dollar and the crosses.

Here’s the scoreboard as at 7.50am AEDT:

  • AUD/USD 0.7472 , -0.0084 , -1.11%
  • AUD/JPY 81.55 , -0.92 , -1.12%
  • AUD/CNH 5.1478 , -0.0441 , -0.85%
  • AUD/EUR 0.6998 , -0.0049 , -0.70%
  • AUD/GBP 0.6009 , -0.0055 , -0.91%
  • AUD/NZD 1.0566 , -0.0067 , -0.63%

The AUD/USD currently sits at the lowest level since September 19.

Joseph Capurso, senior currency strategist at the Commonwealth Bank, put the decline down to a combination of weakness in commodity prices, continued US dollar strength and increased odds of a further rate cut from the RBA following Wednesday’s record-low wage price index.

“AUD/USD lost about 1 US cent overnight because commodity prices were weaker and the USD continued to track higher,” said Capurso.

“Pricing for an RBA rate cut lifted modestly to 18% following yesterday’s very soft Australian Q3 wage growth, at 1.9%pa in Q3 wages are growing at the slowest rate since the series began in 1998.”

The AUD/USD also broke below its 200-day moving average for the first time since May 13 this year, likely triggering further selling from technical traders.

Looking ahead to Thursday’s session in Asia, there’ll be plenty of attention on the release of Australia’s October jobs report at 11.30am AEDT, a release that is now more renowned for resembling a random number generator rather than a definitive read on the state of the labour market.

Employment is expected to increase by 20,000 for the month following a 9,800 decline in September. The unemployment rate is tipped to remain steady at 5.6% thanks to an expected lift in participation to 64.6%.

There’ll also be plenty of attention on the breakdown between part time and full time employment given increased focus on labour market slack that exits within the Australian economy at present.

Later in the session, speeches from US Federal Reserve members will take centre stage, including from chair Janet Yellen.

“The big event tonight is Janet Yellen’s testimony to the Congress’s Joint Economic Committee on the economy,” said David de Garis, an economist at the National Australia Bank.

New York Fed president Bill Dudley and Fed governor Lael Brainard will also speak during the overnight session.

Elsewhere CPI, housing starts, building permits and weekly jobless claims will also be released in US trade.

AUD/USD Daily Chart

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