The Australian dollar is trading at a one-month low this morning, coming under pressure overnight on the back of broad based US dollar strength, technical selling and weaker commodity prices.
Richard Grace, chief currency strategist at the Commonwealth Bank, put the US dollar move down to further hawkish commentary from US Federal Reserve vice chair, Stanley Fischer, in an interview with Bloomberg, along with a surprise surge in US consumer confidence.
“USD has lifted to a fresh two-week high as the anticipation of a near-term lift in the Fed funds rate continues to fuel strength in the USD,” said Grace.
“US consumer confidence in August lifted more than expected to a new high for the year, and Fed Vice Chair Stanley Fischer, in a Bloomberg television interview, said the outlook for interest rates depends on the US economy, and (that) US employment is close to full employment.”
Grace notes that lower Asian currencies and lower base metal commodity prices also contributed to weakness in the Aussie.
As a result of the these US dollar supportive factors, the AUD/USD fell to as low as .7501 in overnight trade, eventually finishing Tuesday’s session at .7509, the lowest closing level seen since July 28.
It currently buys .7510.
Continuing the theme from Tuesday, there is a raft of second tier data releases scheduled domestically and regionally in Asia on Wednesday, although none of that appears likely to move the Aussie significantly one way or another.
“There’s a fair smattering of data and events both locally and internationally today, though it’s questionable whether any of them will have a profound market impact as the clock ticks down to Friday’s US payrolls data and then (hopefully) the return of fuller northern hemisphere market participation from next week,” said Ray Attrill, global co-head of FX strategy at the NAB.
Domestically, markets will receive private sector credit figures for July at 11.30am AEST while RBA assistant governor, Guy Debelle, will speak in Singapore at 11am AEST.
Neither are likely to move markets, suggests Attrill.
“Here we have private sector credit data but this rarely springs much of a surprise or moves either currency or rates market – today’s numbers shouldn’t prove an exception,” he says.
“We also have RBA assistant Governor Guy Debelle speaking at the FX Week Asia conference in Singapore but he has of late been trawling the world talking about the plumbing and code of conduct in the rates and FX market and today’s speech is unlikely to be an exception or veer onto the topic of RBA policy or currency values in any subsequent Q&A.”
Later in the session, markets will receive a raft of US economic data including ADP private sector payrolls, pending home sales and Chicago PMI from 10.15pm AEST.
Two days before the release of US non-farm payrolls for August, Attrill muses that “ADP will grab the headlines, as unreliable a guide to US payrolls as it can be.”
Here’s the current Australian dollar scoreboard, as at 7.50am AEST.
- AUD/USD 0.7510 , 0.0001 , 0.01%
- AUD/JPY 77.34 , 0.02 , 0.03%
- AUD/CNH 5.0255 , -0.0004 , -0.01%
- AUD/EUR 0.6741 , 0.0003 , 0.04%
- AUD/GBP 0.5741 , 0.0001 , 0.02%
- AUD/NZD 1.0396 , 0.0003 , 0.03%
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