No top-tier data from Australia this week! Which catalysts can move the comdoll, then? Here’s a (very) short list:
RBA member speeches
Reserve Bank of Australia (RBA) Assistant Governors Guy Debelle and Michele Bullock are scheduled to give speeches over the next 24 hours or so.
While these events don’t usually affect the Aussie’s price action for long, y’all might want to pay attention to any remarks over the Aussie’s current levels or the RBA’s policy biases.
If we get lucky and we get clues from the RBA members, then we might see a bit of intraday action from the Aussie.
Much like the Kiwi, Aussie’s price action has taken cues from U.S. dollar demand last week.
This week pay attention to (more?) concerns over a Fed rate hike. I see in our forex calendar that a bunch of FOMC members are scheduled to give their two cents, which could reinforce the fact that Powell and his team are planning more rate hikes in the foreseeable future.
Meanwhile, issues such as Italy’s debt, Trump’s opinion on the Fed’s rate hike (not good) and positioning ahead of Uncle Sam’s GDP report on Friday could also affect the demand for the Greenback.
Make sure you stay glued to the tube in case we see market-moving catalysts that might affect demand for the high-yielding Aussie!
Last Week’s Price Review
The Aussie may soon be marking its second week of net wins since the Aussie is currently the second top-performing currency of the week (as of 6:00 am GMT).
And the Aussie is currently a net winner because of the risk-on vibes on Tuesday and Wednesday, as well as Australia’s net positive jobs report, and rising commodity prices.
News that Norway, the E.U., and China have requested the WTO for a dispute resolution panel to address U.S. tariffs on aluminum and steel also apparently helped since that gave the Aussie the winning edge against the yen and Greenback.
The Aussie apparently didn’t track the Chinese yuan this week since the yuan steadily drifted lower during the course of the week, but the the Aussie is currently on track for a win. The Aussie did take some directional cues from gold, but the Aussie didn’t really track gold prices too closely and there were instances when AUD pairs diverged from gold prices.
Having noted that, gold caught a bid on Monday and the Aussie tried to track rising gold prices. However, demand for the Aussie was likely dampened by the risk-off vibes at the time.
Gold would turn lower later, but the Aussie was resilient, very likely because its was feeding off the Greenback’s weakness at the time.
The Greenback began moving higher again during Tuesday’s Asian session, so the Aussie’s resilience eventually began to crack. Fortunately for the Aussie, gold prices moved back up again, so the Aussie also began moving higher.
Gold would slump during Tuesday’s U.S. session, but AUD pairs continued to tilt to the upside on most pairs, likely because risk-taking got revived back then.
Incidentally, the majority of AUD pairs moved above last week’s closing prices (dashed, horizontal line) on Tuesday. And the majority of AUD pairs then began to trend broadly higher after that. This becomes clear if we remove AUD/USD and AUD/NZD from the overlay.
And as a side note, the minutes of the latest RBA meeting were released on Tuesday, but they were practically a dud since the minutes didn’t really reveal anything particularly new or surprising.
Getting back on topic, risk-taking persisted until Wednesday’s Asian session so the Aussie was bid higher on most pairs during all that time. Risk aversion made a comeback during Wednesday’s London session, though, so the Aussie’s rise stalled.
Buyers would return later, thanks to Australia’s jobs report. The reading for net employment change actually failed to meet the market’s expectations (5.6K vs. 15.2K expected), but the details of the report showed that full-time employment increased by 20.4K and the unemployment rate dropped big to 5.0% from 5.3% prev/expected, so the jobs report was still somewhat good overall.
And as icing on the cake, gold prices began trending higher, risk appetite returned, and the Greenback weakened during Thursday’s London session, so the Aussie attracted even more buyers.
Sadly for AUD bulls, risk aversion returned during Thursday’s U.S. session, so the Aussie got rushed by sellers. The majority of AUD pairs remained above last week’s closing prices, however.
Moreover, most AUD pairs found support after word got around that Norway and the E.U. have requested the World Trade Organisation (WTO) to establish a dispute resolution panel to verify the legality of U.S. tariffs on steel and aluminium.
There was a Reuters report later. And the report claimed that the U.S. also filed the same request to the WTO to address the counter-tariffs levied against the U.S. in response to U.S. tariffs on aluminum and steel. The report also noted that Canada, Mexico, and China also plan to join the WTO bandwagon.
And as it later turned out China officially announced that it will also ask the WTO to form a dispute resolution panel, which gave commodities (and the Aussie) a noticeable boost.
PBoC Governor Yi Gang’s statement may have also helped the Aussie since Asian equities began moving higher after he said that (emphasis mine):
“[T]he recent stock market volatility is mainly affected by investor expectations and sentiment. In fact, China’s current economic fundamentals are good, financial risk prevention and control has progressed, macro leverage has stabilized, economic endogenous growth potential is huge, and the economy continues to maintain steady growth. Overall, the current stock market valuation has been at a historically low level, which is in contrast to China’s stable economic fundamentals.”