The Australian dollar rally ran out of puff on Monday

Photo by Cameron Spencer/Getty Images

The Australian dollar fell modestly in overnight trade with the AUD/USD closing Monday’s session buying .7529.

While down 0.5% from Friday’s close, the move was almost entirely driven by US dollar strength rather than Australian dollar weakness.

“The USD index increased above its 200-day moving average,” said Joseph Capurso, senior currency strategist at the CBA.

“The move reflects the slump in the JPY following the Japanese elections, and modest lift against CAD as participants position ahead of BoJ and BoC policy meetings later this month.

“US Treasury yields jumped 5-8bps [basis points] across the curve and expectations for the FOMC lifted yesterday by 7bps but a 0.25% rate hike is not fully priced until mid-2018,” he says.

As a result of strength in the US dollar, along with continued weakness in crude oil futures, the Aussie was dragged lower during the session, failing to join in the risk rally seen in global stocks.

AUD/USD 5-MInute Chart

Looking ahead to Tuesday trade in Asia, the domestic economic calendar is busy with the release of the NAB business confidence survey for June (11.30am AEST) and ANZ weekly consumer confidence index (9.30am AEST) early in the session.

While both are timely given the election has now been run and won, and will create talking points, neither are likely to generate significant volatility in the Aussie. Central bank policy, including from the RBA, continues to drive currency market movements. The Australian dollar is no exception.

Later this afternoon Luci Ellis, head of financial stability at the RBA, will address the Sydney Banking and Financial Stability Conference from 1.30pm AEST.

Outside of Australia the calendar is bare, suggesting that gyrations in Japanese and Chinese markets will likely dictate movements in risk assets across broader region.

Here’s the Australian dollar scoreboard as at 7.30pm AEST.

  • AUD/USD 0.7531 , 0.0002 , 0.03%
  • AUD/JPY 77.4 , 0.01 , 0.01%
  • AUD/CNH 5.0501 , 0.0019 , 0.04%
  • AUD/EUR 0.6809 , 0.0002 , 0.03%
  • AUD/GBP 0.5794 , 0 , 0.00%
  • AUD/NZD 1.0421 , -0.0004 , -0.04%

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