The Australian dollar was dragged lower by a plunge in crude prices overnight

Photo by Frazer Harrison/Getty Images

The Australian dollar tumbled overnight, coming under pressures following a plunge in crude oil.

Here’s the scoreboard as at 8.05am AEST.

AUD/USD 0.7455 , 0.0003 , 0.04%
AUD/JPY 83.35 , 0.04 , 0.05%
AUD/CNH 5.1056 , 0.0041 , 0.08%
AUD/EUR 0.6647 , 0.0002 , 0.03%
AUD/GBP 0.5761 , 0.0004 , 0.07%
AUD/NZD 1.0617 , 0.0012 , 0.11%

Not only did the Aussie fall heavily against the US dollar, but also against the major crosses.

Elias Haddad, senior currency strategist at the Commonwealth Bank, said the Aussie — along with other commodity currencies — sank following a sharp drop in crude oil following OPEC’s meeting in Vienna.

“The 5% plunge in crude oil prices following the OPEC meeting is weighing on the commodity complex,” he said.

“As was anticipated by most market participants, OPEC, alongside their non-OPEC counterparts, agreed to extend crude oil output cuts of 1.8 million barrels per day until end-March 2018.”

Haddad says that prices fell because “there was speculation for longer and deeper cuts to crude oil production”.

It was also well telegraphed that an extension to production cuts was highly likely at this meeting, helping to push crude prices higher over recent weeks. That suggests that the actual news was already priced in, leading to a “buy the rumour, sell the fact” scenario following the announcement.

That weighed on the Aussie, as seen in the 5-minute AUD/USD chart below.

AUD/USD 5-Minute Chart

Turning to Thursday trade in Asia, there’s nothing on the Australian data calendar to interest traders.

Regionally, there may be some interest on the release of Japanese CPI for April at 9.30am AEST, if only for the influence it may have on the Japanese yen and, more broadly, the US dollar in Asia.

Outside of that release there’s little in the way of market moving events.

James Bullard, St Louis Fed president and non-voter on this year’s US FOMC, will speak in Tokyo at midday AEST while Tony Richards, the RBA’s head of payments policy, will participate in a panel discussion at Australian Retail Banking Summit from 2.30pm AEST.

Later in the session, markets will receive the second estimate of Q1 US GDP, the final reading of the University of Michigan US consumer confidence survey for May along with US durable goods orders for April.

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