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The Australian dollar just hit the highest level since June 2015

Photo: Getty Images.

The Australian dollar began the new trading week as it ended off the last, briefly hitting the highest level since June 2015 this morning before easing lower in recent trade.

Here’s the scoreboard as at 7.50am AEST.

AUD/USD 0.7823 , -0.0005 , -0.06%
AUD/JPY 87.99 , -0.02 , -0.02%
AUD/CNH 5.2915 , 0.0021 , 0.04%
AUD/EUR 0.6819 , -0.0002 , -0.03%
AUD/GBP 0.5968 , -0.0006 , -0.10%
AUD/NZD 1.0638 , -0.0003 , -0.03%
AUD/CAD 0.9898 , 0.0001 , 0.01%

And here’s the AUD/USD weekly chart, revealing the bullish price action in the Aussie that has seen in add close to 7% from the low of .7326 hit on May 9.

The AUD/USD added 2.93% last week, the largest gain since March 2016, thanks to a combination of technical buying, dovish language from US Federal Reserve chair Janet Yellen, soft US economic data along with strong domestic and Chinese data.

Earlier today it hit .7838, seeing it move above the high of .7835 struck on April 21 last year.

While a strong move higher, whether the Aussie’s upward momentum can be sustained in the short-term will likely be determined by the release of major Chinese economic data during Monday’s session, including Q2 GDP.

Markets are looking for an increase of 6.8% year-on-year, down from 6.9% in Q1.

If recent history is anything to go by, the GDP figure is unlikely to deliver a downside surprise. Of the past nine GDP reports, all have either printed in line with the median economist forecast or exceeded it by 0.1%. None have undershot market expectations over that period.

Outside of the GDP report, China will also release industrial output, retail sales and urban fixed asset investment figures for June.

The former is expected to print at 6.5% year-on-year, unchanged from the level reported in May, while the latter two are tipped to come in at 10.6% and 8.5%, down 0.1 percentage point on the levels reported a month earlier.

All of the reports are scheduled for release at midday AEST.

“China’s economy likely expanded at an annual pace of 6.8% in Q2 driven by net exports and housing investment,” said Elias Haddad, senior currency strategist at the Commonwealth Bank.

“This will support base metal prices and Australia’s terms of trade.”

A clear break above .7835 for the AUD/USD will have traders licking their lips at the prospect of the Aussie moving back towards the 80 US cent level.

Later in the session, markets will also receive final inflation figures for June from the eurozone along with the New York Manufacturing Index fort July.

Ray Attrill, head of FX strategy at the National Australia Bank, says that US politics will have a large say in how currency markets perform this week.

“We’ll be looking to developments in Washington this week as a major market swing factor, specifically the progress of otherwise of the Senate version of a Health Care Reform bill,” he says.

“Abandonment of the bill — if more than two Republicans commit to vote against — would deepen the sense Trump’s whole policy agenda is dead in the water.”

Attrill says that some progress on healthcare reforms could help to reverse some the US dollar’s recent weakness, something that has contributed to the Aussie’s recent ascent.

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