The Australian dollar reversed hard overnight, tumbling from a high of .8065 in Asia to close the session at .7963.
It’s first foray above the 80 US cent level since May 2015 didn’t last long.
Here’s the scoreboard as at 8am AEST.
AUD/USD 0.7965 , 0.0002 , 0.03%
AUD/JPY 88.64 , 0.08 , 0.09%
AUD/CNH 5.3703 , -0.0002 , 0.00%
AUD/EUR 0.6818 , -0.0001 , -0.01%
AUD/GBP 0.6094 , 0 , 0.00%
AUD/NZD 1.0634 , 0.0007 , 0.07%
AUD/CAD 1.0006 , 0.0012 , 0.12%
David de Garis, economist at the National Australia Bank, said the Aussie’s decline was entirely driven by a rebound in the US dollar.
“It’s been an overnight session marked by a mild bounce in the US dollar into the end of the month,” he said, noting that US economic data released overnight helped to firm up expectations for US Q2 GDP that will be released later tonight.
“It was the combination of a somewhat better than expected durable goods orders report for June, a lower than expected advance US goods trade report, and higher than expected wholesale inventories that added to recent growth sentiment.”
As a result, de Garis notes that the Atlanta Fed’s GDPNow estimate for US Q2 growth rose from 2.5% to 2.8%.
Richard Grace, chief currency strategist at the Commonwealth Bank, also said that the US dollar was supported by the news that Republican House Speaker Paul Ryan, and five other senior Republicans, had issued a statement saying they are giving up on the idea of a border-adjusted tax (BAT).
“We had done extensive published research on the BAT and figured it was very negative for the USD over the early years if it was implemented. Perhaps some of the overnight increase in the USD was due to the BAT’s abandonment,” he said in his morning note.
The combination of stronger-than-expected US economic data and the news over the BAT abandonment certainly helped the US dollar, ensuring that it rebounded sharply against the Aussie.
Looking ahead to Friday trade, most of the market-moving events will arrive in the second half of the session.
In Australia, producer price inflation (PPI) figures for the June quarter will be released while in Japan markets will receive the latest reads on inflation, retail sales and unemployment.
If recent history is anything to go by, they’ll come and go without triggering a ripple across currency markets.
Later in the session, the economic events calendar starts to heat up with the release German CPI, Eurozone consumer confidence and preliminary GDP estimates from France and Spain.
In the US, traders will also receive the preliminary estimate of US Q2 GDP, employee costs and the final reading of the University of Michigan consumer confidence index for July.
Most attention will be on the GDP print with market expectations centred around an increase of 2.6%, according to forecasts offered to Thomson Reuters.
It will arrive at 10.30pm AEST.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.