The Aussie dollar managed to brush aside Australia’s weakest GDP result since the global financial crisis overnight, rallying hard on the back of strong gains in stocks and bulk commodity markets.
Here’s the scoreboard as at 7.50am AEDT:
- AUD/USD 0.7474 , 0.0014 , 0.19%
- AUD/JPY 85.05 , 0.01 , 0.01%
- AUD/CNH 5.1531 , 0.0161 , 0.31%
- AUD/EUR 0.6942 , -0.0016 , -0.23%
- AUD/GBP 0.5920 , 0.0037 , 0.63%
- AUD/NZD 1.0425 , -0.005 , -0.48%
“The more than 1% rally in US and European equity markets, resilient iron ore future prices and softer USD supported the AUD/USD upleg,” said Elias Hadad, senior currency strategist at the Commonwealth Bank.
“We did not expect AUD/USD to depreciate much following Australia’s disappointing Q3 GDP report because the AUD is much more sensitive to commodity prices than the volume of exports or GDP growth.”
Turning to Thursday trade in Asia, there’s major economic data released in Australia, Japan and China.
Locally, trade figures for October will be released at 11.30am AEDT with economists expecting the trade deficit to narrow to $800 million thanks to higher commodity prices.
Regionally, revised Japanese Q3 GDP figures will arrive at 10.50am AEDT — a seasonally adjusted annual rate of 2.4% is expected, up from 2.2% reported previously — while in China international trade figures for November will also be released.
In reality, it’s only the Chinese trade figure that appears likely to generate any real significant volatility in the Aussie.
Markets are looking for exports to decline by 5% in US dollar terms from a year earlier, smaller than the 7.3% contraction reported previously, while imports are expected to dip by a smaller 1.3% over the same period.
The trade surplus is expected to narrow to $US46.3 billion.
There is no set time scheduled for the trade release, although it has a tendency to arrive around 1pm in Sydney.
With the US economic calendar devoid of any tier-one data releases, all attention later in the session will be on the European Central Bank’s final monetary policy decision of 2016.
“We expect the ECB to make no monetary policy changes,” says Haddad.
“However, the ECB’s governing council is expected to assess the options available to ensure a ‘smooth implementation’ of the current asset purchase programme.”
Haddad also notes that the bank will also release new macroeconomic projections, something that has the potential to move markets, including the Aussie, based off expectations for euro-area monetary policy moving forward.
ECB president Mario Draghi’s press conference is scheduled to get underway at 12.30am in Sydney.