The Australian dollar keeps on grinding higher

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The Australian dollar has opened Tuesday’s trading session just below 76 cents, having made an exploratory probe above this level following the release of strong Chinese economic data on Monday.

Here’s the scoreboard as at 7.50am AEST.

  • AUD/USD 0.7586 , 0 , 0.00%
  • AUD/JPY 82.69 , 0.09 , 0.11%
  • AUD/CNH 5.2155 , -0.0016 , -0.03%
  • AUD/EUR 0.7123 , -0.0002 , -0.03%
  • AUD/GBP 0.6035 , -0.0001 , -0.02%
  • AUD/NZD 1.0819 , 0 , 0.00%

After rising to as high as .7610 in overnight trade, fuelled by an across-the-board beat from Chinese economic data on Monday and soft US core CPI figures for February released on Thursday evening, the AUD/USD weakened in the latter parts of the session following remarks from US Treasury secretary Steve Mnuchin that US dollar strength was a “good thing”.

In an interview with the Financial Times, Mnuchin said that “as the world’s currency, the primary reserve currency, I think that over long periods of time the strength of the dollar is a good thing”, acknowledging that “it’s a function of the confidence and the strength of the US economy”.

That helped to reverse some of the selling in the US dollar, and buying in US treasuries, that followed remarks from US president Donald Trump last week that strength in the US dollar was making it hard to compete with other nations with weaker currencies at present.

“The president was making a factual comment about the strength of the dollar in the short term,” said Mnuchin. “There’s a big difference between talk and action”.

In response to Mnuchin’s remarks, the US dollar and bond yields lifted, seeing the Aussie’s gains reverse in the latter parts of trade.

AUD/USD Hourly Chart

In what sets the tone for the week ahead, there’s little on the economic data front that appears likely to move the Aussie significantly one way or another during Tuesday trade in Asia, including the release of the minutes of the Reserve Bank of Australia’s April monetary policy meeting at 11.30am AEST.

“The minutes are unlikely to yield much in the way of new information given RBA governor Lowe gave public remarks following the April board meeting,” says Ray Attrill, head of FX strategy at the National Australia Bank.

They also pre-date the release of Australia’s March jobs report which came in far stronger than anyone expected, potentially alleviating concern towards the labour market expressed by the RBA in its post-meeting statement.

Outside of Australia, there may be some passing interest on the release of Chinese new home price data for March at 11.30am AEST, particularly given signs that house prices are once again strengthening despite a variety of measures being introduced by policymakers to curb rapid price increases.

Later in the session, markets will also receive building permits, housing starts and industrial output figures from the United States.

Given the quiet data calendar, it suggests that geopolitical concerns surrounding North Korea, Syria and France may prove influential in dictating sentiment both on Tuesday and in the days ahead.

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