You just can’t keep the Australian dollar down at present. On almost every dip, it seems to find a new batch of buyers.
That was certainly the theme seen overnight, continuing the pattern from July 27 — the day Australia’s Q2 CPI was released — with the AUD/USD touching a high of .7640, a level not seen since July 15.
It eventually closed the session buying .7627, up another 0.5%.
From the low of July 27, it has now gained 2.75%, threatening to break above resistance layered between .7640-75.
Buying against the British pound following a wave of fresh monetary policy stimulus announced by the Bank of England overnight, along with continued strength in global crude prices, likely assisted the Aussie’s surge overnight.
It also came despite a hefty 3.5% decline in iron ore prices, the largest seen in nearly two months.
Looking ahead to Friday trade in Asia, the Aussie, along with financial markets more broadly, faces two big events over the next 24 hours: the release of the Reserve Bank of Australia’s quarterly statement on monetary policy and US non-farm payrolls for July that will arrive later in the evening AEST.
“As far as the Statement on Monetary Policy (SOMP) is concerned, we have two main interests,” wrote David de Garis, senior economist at the NAB in his morning note.
“First, to focus on their discussion about the economy and any further clarification about any new reasons for further cutting the cash rate this week. Was it the second easing given the generally low inflation outlook or was there something more specific that was the catalyst for Tuesday’s move? We suspect the latter.
“The second major point of interest will be their forecasts for growth and inflation in the economy generally and specifically their GDP and inflation and forecast tracks and whether they will be any different from the forecasts published in May. We suspect not, but that’s not to day they won’t ease if inflation continues to lay low.
“At least one more rate cut is likely to be embedded in their market pricing assumption behind their forecasts,” he adds.
The SOMP will be released at 11.30am AEST.
As for the US non-farm payrolls report, de Garis believes “there’ll be as much interest in earnings growth, the market consensus looking for monthly growth in earnings of 0.2% and annual growth of 2.6%, a continuing moderate uptrend”.
Payrolls are expected to increase by 180,000, leaving the unemployment rate at 4.8%.
The report will arrive at 10.30pm AEST Friday.
Outside of those events, movements in the Aussie are also likely to be influenced by those in crude oil futures along with the gyrations in USD/JPY.
Here’s the Aussie dollar scorecard, as at 7.55am AEST.
- AUD/USD 0.7624 , -0.0003 , -0.04%
- AUD/JPY 77.12 , -0.03 , -0.04%
- AUD/CNH 5.0668 , -0.0001 , 0.00%
- AUD/EUR 0.6850 , 0.0001 , 0.01%
- AUD/GBP 0.5813 , -0.0002 , -0.03%
- AUD/NZD 1.0623 , 0.0003 , 0.03%