The Australian dollar rose modestly in overnight trade, capitalising on lower US bond yields which undermined the US dollar.
A near 3% surge in crude futures may have also contributed to the Aussie’s strength, helping to offset negativity in European and US financial stocks.
“There is evidently still some optimism a production accord can be reached as OPEC ministers meet informally in Algiers,” said Ray Attrill, global co-head of FX strategy at the National Australia Bank, in his morning note.
The AUD/USD finished Monday’s session buying .7636, having traded up to as high as .7650 earlier in the day.
It currently fetches .7634.
Turning to Tuesday’s session in Asia, the movements in the Aussie, and indeed all financial markets, will likely be dictated by one event and one event only: the first US presidential debate between Democrat Hillary Clinton and Republican Donald Trump that will begin at 11am AEST.
According to Richard Grace, chief currency strategist at the Commonwealth Bank, the debate is likely to lead to a “mild amount of volatility in the markets”.
“But the real currency impacts won’t eventuate unless the outsider, Donald Trump, wins the election on 8 November,” he says.
With Clinton expected to not only win the debate but the November 8 presidential election, a clear win for Trump will likely lead to modest US dollar strength, along with pressure on riskier assets in Asia, including the Aussie dollar.
Conversely, a win for Clinton — while expected — will likely support risk assets across the region.
“There are no major Australian economic releases this week so AUD will be influenced by the trend in the USD, broader financial market sentiment and commodity prices,” says Grace.
Outside of the presidential debate, there is very little for traders to focus on, sans the now customary headlines surrounding the OPEC meeting being currently held in Algeria.
In Asia, markets will receive the weekly ANZ-Roy Morgan Australian consumer confidence index at 9.30am AEST while regionally, China will release industrial profits data for August.
Neither are likely to move the Aussie.
Later in the session, markets will also receive consumer confidence, house price and services PMI figures from the US.
Here’s the current Aussie dollar scoreboard as at 8am AEST.
- AUD/USD 0.7634 , -0.0002 , -0.03%
- AUD/JPY 76.56 , -0.02 , -0.03%
- AUD/CNH 5.1020 , 0.0007 , 0.01%
- AUD/EUR 0.6780 , -0.0003 , -0.04%
- AUD/GBP 0.5882 , -0.0001 , -0.02%
- AUD/NZD 1.0493 , 0.0002 , 0.02%