The Australian dollar staged a comeback overnight

Photo by Cameron Spencer/Getty Images

The Australian dollar resembled a rollercoaster on Thursday, falling steadily in Asia and Europe before ripping higher in US trade.

There was no obvious catalyst to explain the price action, with everything from weak Chinese data, reduced odds of a US rate hike, a recovery in crude oil prices and profit-taking in the US dollar following a week of solid gains being used to explain the recovery in the Aussie.

Looking at the charts this morning, it appears that the recovery in US stocks was influential on movements in the Aussie.

Certainly US economic data released during the session did nothing to dissuade the view that another US rate hike is coming, with initial jobless claims falling to the lowest level since November 1973.

The AUD/USD eventually finished the session buying .7568, an area that it continues to oscillate around in early Asian trade.

AUD/USD 5-Minute Chart

Looking to the session ahead, there are two macro events that are likely to interest traders — the release of the Reserve Bank of Australia’s semi-annual financial stability report and Chinese consumer and producer price inflation figures for September.

“The RBA Financial Stability Review is out this morning and given its acknowledged importance in the newly minted agreement between the Governor and the treasurer, the report might garner a bit more attention than what it has done in the past,” said Rodrigo Catril, currency strategist at the National Australia Bank.

“Our economists will be looking for any commentary around the housing market and specifically the apartment sector as a potential threat to stability.”

The report will be released at 11.30am AEDT, one hour before the Chinese data hits.

Markets expect consumer price inflation will increase 1.6% year-on-year, up from the 1.3% pace seen in August. The recovery in producer prices is also expected to continue with the annual drop in prices expected to slow to just 0.3%.

Outside of economic data, the USD/CNY fix from the People’s Bank of China at 12.15pm AEDT, along with movements in crude oil futures, are likely to be influential on the Aussie during the session.

Later tonight, US retail sales figures for September, along with the University of Michigan consumer confidence report for October, are both scheduled for release.

Ensuring a big and potentially volatile session for currency markets, Janet Yellen, US Federal Reserve chair, will also speak during the US session.

Here’s the Aussie dollar scoreboard as at 8.05am AEDT.

  • AUD/USD 0.7566 , -0.0002 , -0.03%
  • AUD/JPY 78.45 , 0.00 , 0.00%
  • AUD/CNH 5.0939 , -0.0009 , -0.02%
  • AUD/EUR 0.6843 , 0.0001 , 0.01%
  • AUD/GBP 0.6174 , 0.0001 , 0.02%
  • AUD/NZD 1.0656 , -0.0006 , -0.06%

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