The Australian dollar's winning streak ends with a thud

Photo by Mirco Lazzari gp/Getty Images

The Australian dollar’s remarkable nine-session winning streak, the equal third-longest in its post-float history, came to a spectacular end overnight with the currency tumbling over one percent on the back of an increase in risk aversion.

As of 8.30am AEDT the AUD/USD currently buys .7232, approximately 1.5 cents below Monday’s high of .7382.

Ray Attrill, global head of FX strategy at the NAB, summed up yesterday’s price action for the Aussie nicely in his market report this morning.

“Yesterday’s local session promised much by way of event risk but in the end delivered little in terms of market price action. The main impact came from the weaker than expected China import data and which took a small bite out of the AUD and gave a very minor fillip (lower yields) to the local rates market,” said Attrill.

“For the currency, it looked to be a case of what couldn’t go up on the (decent) NAB survey goes down on the (slightly worse than expect) China import data, with negative sentiment then gathering momentum in offshore markets.”

Looking ahead to Wednesday’s trading session, investors will have their eye on the latest Westpac-MI consumer sentiment report for October when it is released at 10.30am AEDT. Having fallen heavily in September on the back of financial market turmoil, recent gains in stocks and the Australian dollar point the the likelihood of an improved reading today. As seen in alternate sentiment gauges in recent weeks, the change in Australia’s political leadership may also contribute to a bounce.

Outside of Australia, the Monetary Authority of Singapore (MAS) will also announce its semi-annual monetary policy decision at 1pm AEDT. To Attrill, there are risks that the MAS will ease policy at its meeting.

“With Asian EM developments continuing to have significant feedback to the AUD (and NZD) markets, the Monetary Authority of Singapore’s Monetary Policy Statement will be of interest beyond the island state’s borders. We expect some form of policy easing, most likely via either a re-centring of the band the MAS targets for the SGD Nominal Effective Exchange Rate (S$NEER) or a reduction in the slope of the band (future appreciation path) to zero from about +1% which we currently estimate,” he wrote.

“Any easing measures should see SGD re-weaken after the recent rally, with spill-over effects to other regional currencies and perhaps too AUD and NZD.”

Elsewhere China will also release CPI and PPI data for September at 12.30pm AEDT, although its impact on financial markets is now considerably less than what was the case in previous years.

Here’s the Australian dollar scoreboard.

  • AUD/USD 0.7232 , -0.001 , -0.14%
  • AUD/JPY 86.59 , -0.11 , -0.13%
  • AUD/CNY 4.5857 , -0.0063 , -0.14%
  • AUD/EUR 0.6352 , -0.0009 , -0.14%
  • AUD/GBP 0.4741 , -0.0008 , -0.17%
  • AUD/NZD 1.0884 , -0.001 , -0.09%

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