The Australian dollar is under pressure as fears of a 'hard Brexit' grow

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The Australian dollar has fallen modestly on Monday morning having closed Friday’s session at the highest level seen since November 15.

Here’s the scoreboard as at 7.50am AEDT.

  • AUD/USD 0.7487 , -0.0012 , -0.16%
  • AUD/JPY 85.42 , -0.40 , -0.47%
  • AUD/CNH 5.1253 , -0.0055 , -0.11%
  • AUD/EUR 0.7057 , 0.0017 , 0.24%
  • AUD/GBP 0.6242 , 0.0089 , 1.45%
  • AUD/NZD 1.0532 , 0.0007 , 0.07%

The move appears to have been sparked by a bout of risk aversion following an article from the UK Telegraph over the weekend said that a speech from UK prime minister Theresa May on Tuesday will outline the case for a so-called “hard Brexit” from the European Union.

That appears to have weighed on early market sentiment, particularly on the UK pound which has been hammered.

However, while it has weakened in early trade against the US dollar and Japanese yen, Elias Haddad, senior currency strategist at the Commonwealth Bank, doesn’t expect that move to last.

“We expect AUD/USD to remain firm this week on higher commodity prices and encouraging Australian December employment growth,” he said on Monday morning.

“Iron ore prices are vulnerable to more upside this week because improving global leading economic indicators suggest the IMF may upgrade slightly its global growth outlook.

“Also, we are looking for decent Chinese Q4 GDP growth and December economic activity data.”

While those events will dictate direction later in the week, there’s no major data releases or events scheduled in Asia on Monday, suggesting that investor sentiment will dictate market direction, including in the Aussie.

In particular, movements in the US treasury yields, along with those in the British pound, Chinese yuan and Japanese yen, will likely prove to be influential during Monday’s session.

AUD/USD Daily Chart

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