The Australian dollar stabilised overnight

Photo by Stanley Chou/Getty Images

The Australian dollar fell against the greenback but rose against the crosses overnight, a reversal of the trend seen in the previous two sessions.

Strong US economic data, along with a modest recovery in investor risk appetite, largely explained the divergence from the recent price action.

Here’s the Aussie dollar scoreboard as at 8.10am AEST.

AUD/USD 0.7419 , 0.0003 , 0.04%
AUD/JPY 82.76 , 0.09 , 0.11%
AUD/CNH 5.1081 , 0.004 , 0.08%
AUD/EUR 0.6680 , 0.0002 , 0.03%
AUD/GBP 0.5731 , -0.0002 , -0.03%
AUD/NZD 1.0749 , 0.0003 , 0.03%

In US economic data released overnight, initial jobless claims fell by 4,000 to 232,000, seeing it move back towards the lowest levels seen in over four decades. There was also good news on the health of the nation’s manufacturing sector with the Philadelphia Fed manufacturing index jumping to +38.8 points in May, up from +22.0 points in April.

The data helped to put a bid in the US dollar after it fell to the lowest level since November 9 earlier in the week, particularly against the Japanese yen and euro.

While that saw the AUD/USD fall modestly, it saw the Aussie outperform against the crosses, recouping some of the heavy declines recorded in the previous two sessions.

Here’s the AUD/EUR hourly chart, showing the Aussie’s latest attempt to crawl off the mat after several days of losses.

AUD/EUR Hourly Chart

After series of major data releases earlier this week, the economic data calendar slow to a crawl on Friday, likely ensuring that US politics, and sentiment as to what may occur in the period ahead, will continue to drive price action across markets.

There’s no major market-moving events scheduled across Asia, suggesting that movements in US treasury yields, the USD/JPY and Chinese commodity future will likely prove most influential on the Aussie.

Later in the session, central bank speak will be in focus with a series of ECB members scheduled to appear.

“Tonight there are three ECB speakers, and the market will continue to sift through these speeches for the differing views,” said David de Garis, director of economics at the National Australia Bank. “It’s certainly now looking like the June 8 meeting will produce a shift to a more balanced assessment (from the ECB).”

James Bullard, St Louis Fed president, will also be in action.

On the data front, there are few events that will likely generate any significant market volatility, particularly in the Aussie.

In Europe, markets will receive consumer confidence figures for May along with German producer price inflation for April. In North America, Canadian CPI and retail sales figures will provide the session highlights.

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