The Australian dollar is within touching distance of hitting fresh highs

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The Australian dollar is within touching distance of hitting a fresh multi-year high.

But rather than being driven by Australian dollar strength, its latest push higher was yet again driven by broad-based US dollar weakness.

Here’s the scoreboard as at 7am AEST.

AUD/USD 0.8046 , 0.0047 , 0.59%
AUD/JPY 87.25 , -0.12 , -0.14%
AUD/CNH 5.2173 , -0.0144 , -0.28%
AUD/EUR 0.6692 , -0.0019 , -0.28%
AUD/GBP 0.6140 , 0.0008 , 0.13%
AUD/NZD 1.1120 , 0.0013 , 0.12%
AUD/CAD 0.9744 , -0.0032 , -0.33%

As the scoreboard reveals, the AUD/USD is now back above the 80 cent level, closing in quickly on the more than two-year high of .8065 struck in late July.

At .8046, it was also the highest close since May 14, 2015.

The Aussie’s latest surge was driven by another slide in the US dollar index which fell to the lowest level since January 2015, coming under pressure thanks to a resurgent euro and weak US economic data released during the session.

The euro jumped following the release of the European Central Bank’s September monetary policy decision, driven by speculation that it will announce a tapering of its asset purchase program at its October monetary policy meeting.

While some expected that announcement would come overnight, ECB president Mario Draghi made no real attempt to talk down the euro’s recent strength, resulting in the euro rocketing higher.

As the largest component in the US dollar index, that weakened the greenback against most major currency pairs, including the Aussie dollar.

A spike in US initial jobless claims to a more than two-year high as a result of Hurricane Harvey did little to help the dollar’s causes.

AUD/USD 4-Hour Chart

Turning to the session ahead, there’s plenty of risk events for traders to navigate before the weekend arrives.

On the data front, Australian housing finance data for July will be released at 11.30am AEST.

Guy Debelle, deputy RBA governor, will participate in a panel discussion at the FINSIA Signature Event in Sydney at 1pm AEST. Philip Lowe, RBA governor, is also expected to deliver short remarks at the Bank of China Sydney Branch’s 75th Anniversary dinner at 6.3pm AEST.

Outside of Australia, revised Japanese Q2 GDP data will be released at 9.50am AEST while Chinese trade figures for August will arrive at some point around 1pm AEST.

Bill Dudley, New York Fed president and permanent FOMC voter, will also speak at 9am AEST.

Later in the session, highlights include German trade data, French and UK industrial output, US consumer credit and Canadian unemployment data.

North Korea is also expected to launch an Intercontinental Ballistic Missile (ICBM) on Saturday to celebrate the country’s founding, something to consider as market volumes dry up later in the session.

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