The Australian dollar was all over the place overnight

Photo by ChinaFotoPress/ChinaFotoPress via Getty Images

After tumbling to as low as .7173 in European trade, the Australian dollar managed to find its footing in the second half of overnight trade, closing Thursday’s session flat at .7225.

Continuing the familiar theme of late, particularly on days devoid of major economic data releases, the recovery was underpinned by a surge in the crude oil price in the second half of US trade.

At one point front-month US WTI futures were trading down more than 3% at US$46.73 a barrel before recovering to close the session with a gain of 0.17%.

AUD/USD 5-Minute Chart

Interestingly, the recovery in the Aussie came despite a slump in the iron ore price and further hawkish remarks from another leading US Federal Reserve official.

The spot iron ore price tumbled by close to 6%, closing at the lowest level seen since March 15 this year.

Markets also ignored hawkish commentary from Bill Dudley, the New York Fed president who is also a FOMC voting member.

“USD showed little reaction to New York Fed President William Dudley’s comments that June is ‘definitely a live meeting’ and a June-July hike is ‘reasonable’ if the economy meets his outlook,” said Richard Grace, CBA chief currency strategist in his morning note.

“Dudley also stated he is ‘growing more confident’ inflation will get back up to 2% per annum, with the labour market ‘showing signs of wage pressures’ and with core inflation having remained stable despite the USD strength and lower energy prices,” added Grace.

As at 7.45am AEST, the AUD/USD currently buys .7220, largely unchanged for the session.

Looking ahead to Friday’s session in Asia, there are next to no market moving releases scheduled.

This suggests that movements in crude prices, along with USD/JPY and USD/CNH, will likely be influential on the Australian dollar.

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