The Australian dollar was rejected at 77 cents again overnight

Photo by Maddie Meyer/Getty Images

The Australian dollar just can’t break the 77 cent level at present, coming within a whisker overnight before tumbling lower on the back of renewed US dollar strength.

Here’s the current Australian dollar scoreboard as at 7.40am AEDT:

  • AUD/USD 0.7651 , 0.0013 , 0.17%
  • AUD/JPY 87.42 , 0.55 , 0.63%
  • AUD/CNH 5.2463 , -0.0024 , -0.05%
  • AUD/EUR 0.7236 , 0.0031 , 0.43%
  • AUD/GBP 0.6137 , 0.0039 , 0.64%
  • AUD/NZD 1.0675 , 0.0036 , 0.34%

As the scoreboard reveals, while the Aussie has gone almost nowhere against the US dollar over the session, it has actually outperformed by some margin against the crosses, benefiting from a strong NAB Australian business confidence survey and acceleration in Chinese inflationary pressures seen in data released on Tuesday.

The reason for the muted move against the US dollar was remarks from US Federal Reserve chair Janet Yellen before the US Senate overnight. Yellen said “waiting too long to remove accommodation would be unwise, potentially requiring the FOMC to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession”.

That helped to lift US bond yields, and as a consequence, the US dollar.

However, as shown in the hourly chart below, the AUD/USD came close to breaking through the 77 cent level just before Yellen spoke.

AUD/USD Hourly Chart

It just can’t muster the energy to bust through that level yet.

And, with a calendar devoid of market moving events in Asia, that outcome is unlikely to be seen on Wednesday.

In Australia, the Westpac-MI consumer sentiment report for February will be released at 10.30am AEDT. That will be followed by new car sales for January at 11.30am AEDT.

Neither release will create a stir in the Aussie.

Before those data releases hit, Alexandra Heath, the RBA’s chief economist, will speak at the ABE Forecasting Conference in Sydney from 7.50am AEDT.

We’ve heard a lot from the RBA in the past week, so it would take something extraordinary to jolt the Aussie dollar.

Elsewhere, the economic calendar in Asia is quiet, ensuring that fluctuations in the USD/JPY and USD/CNY — often influential on movements in the US dollar index in Asia — will be one factor to watch during the session.

In the second half of the session, markets will receive CPI, retail sales, industrial production and the Empire State Manufacturing Index from the US, along with UK unemployment data.

A busy calendar, and one that has the potential to create some volatility in the Aussie.

Janet Yellen will also deliver her testimony to the US House Financial Services Committee, having done the same for the Senate overnight.

It’s usually much the same as what was heard previously, but there’s a potential for some deviation.

That kicks off at 2am AEDT.

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