The Australian dollar staged a dramatic turnaround in overnight trade, dropping from a fresh cyclical high of .7835 to as low .7729 midway through the European session.
The reversal mirrored those in risk assets more broadly, something that corresponded with the conclusion of the ECB monetary policy meeting media conference.
In early Asian trade on Friday, the AUD/USD currently buys .7738, down over 1.2% from the overnight high.
Richard Grace, chief currency strategist, put the dramatic turnaround down to renewed weakness in crude and stocks, along with strength in the US dollar.
“AUD/USD has declined 1.3% after touching a cyclical high last night. USD strength, lower oil prices and a fall in European and US stockmarkets were behind the move,” said Grace in his morning note.
“The decline in AUD came despite a another surge higher in iron ore prices, above $70 a tonne. AUD was lower against all the major crosses. Without a particular catalyst, the move should just be put down to noise. The current upward trend in AUD remains firmly intact.”
As Grace points out, the losses in the Aussie came despite another surge in the benchmark spot iron ore price — Australia’s chief commodity export — which rocketed by 8.78%, or $5.69, to $70.46 a tonne, leaving it at the highest level seen since January 9, 2015.
This year alone it’s surged 61.7%, helping to underpin recent gains in the Aussie.
Looking ahead to Asian trade on Friday, there are no major data events scheduled, either domestically or across the region.
This suggests movements in crude oil futures, along with those in Chinese markets, will likely be influential on the Aussie in what is likely to be a quiet session of trade.
Here’s the current Australian dollar scoreboard.
- AUD/USD 0.7738 , 0.0001 , 0.01%
- AUD/JPY 84.67 , 0.00 , 0.00%
- AUD/CNY 5.0179 , -0.0009 , -0.02%
- AUD/EUR 0.6855 , 0.0002 , 0.03%
- AUD/GBP 0.5403 , 0.0002 , 0.04%
- AUD/NZD 1.1192 , 0.0002 , 0.02%