Money The Australian dollar continues to rally

18:32  03 january  2018
18:32  03 january  2018 Source:   Business Insider Australia

Australia, New Zealand dollars near multi-week peak on metals, carry trades

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The Aussie sank to US73.22c as traders pushed up the US dollar in the wake of the Republican’s presidential victory.

The Australian dollar continued to rally on Tuesday, hitting yet another multi-month high against the greenback. To Greg McKenna, chief market strategist at AxiTrader, the main factor behind the move was continued US dollar weakness.

  The Australian dollar continues to rally © Provided by Business Insider Inc

The Australian dollar continued to rally on Tuesday, hitting yet another multi-month high against the greenback.

Here's the scoreboard as at 8.10am AEDT.

AUD/USD0.7832,0.0029,0.37%
AUD/JPY87.91,0.02,0.02%
AUD/CNH5.0908,0.0091,0.18%
AUD/EUR0.6491,-0.0005,-0.08%
AUD/GBP0.5759,-0.0018,-0.31%
AUD/NZD1.1015,0.0036,0.33%
AUD/CAD0.9791,-0.001,-0.10%

After starting the session buying .7803, the AUD/USD rallied on the back of stronger-than-expected Chinese economic data, strength in Chinese stocks and broad-based US dollar weakness, eventually hitting a high of .7844 before easing lower in the second half of the session.

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She said there could be a 4 to 6 per cent rally in the dollar . "For the first time in two years, the Reserve Bank of Australia expressed comfort with the By dropping their easing bias, the RBA set off a wave of short covering in the Australian dollar last night that we expect to continue in the weeks to come."

The Australian dollar continued to rise today following yesterday’s surge. Yesterday’s rally was caused by the policy minutes of the Reserve Bank of Australia , which market participants considered hawkish.

It currently sits at the highest level since late October.

To Greg McKenna, chief market strategist at AxiTrader, the main factor behind the move was continued US dollar weakness.

Australia, New Zealand dollars underpinned by upbeat China manufacturing activity

  Australia, New Zealand dollars underpinned by upbeat China manufacturing activity <p>The Australian and New Zealand dollars held firm on Tuesday as an unexpectedly upbeat survey of Chinese manufacturing activity and broad softness in their U.S. counterpart augured well for Antipodean commodity exports.</p>The Aussie dollar (AUD=D4) made a two-month top of $0.7827 before running into resistance. The next chart targets are $0.7884 and $0.7898, both peaks from October. The kiwi held at $0.7102 (NZD=D4), just off last week's high at $0.7124.

The Australian dollar continues to move higher on Thursday. In the European session, AUD /USD is trading in the mid-0.89 range. The Aussie has looked superb this week, jumping over 200 points against the US dollar .

This month, the Australian dollar rallied to its highest since May 2015, breaching the 80 US cent mark. Some retracement is likely given we expect the Federal Reserve (the Fed) to continue to tighten policy, despite the Fed’s more cautious stance of late.

"On currency markets it was a simple process of rinse and repeat as the US dollar came under heavy selling pressure once again," he said in his morning note. "It did mount a fight back after solid European manufacturing PMIs was countered with US manufacturing strength, but it is generally weaker across the board."

At 91.832, the US dollar index (DXY) -- heavily influenced by movements against the euro -- is currently down 0.32% for the session, extending its decline from early November to 3.5%.

McKenna says that for this trend in the DXY to reverse, it will require either a softer batch of European economic data releases or a material strengthening in upcoming US economic data, something that typically does not occur in the first quarter of the year.

"When it comes to other currencies, the USD weakness is a big factor in the rallies we are seeing," he adds.

a close up of a map© Provided by Business Insider Inc

Whether that trend will continue on Wednesday will likely be determined by sentiment and technicals rather than economic data.

There's next to no major data releases scheduled in Australia or abroad, and Japanese markets are on holiday.

German unemployment data for December, along with manufacturing PMI and construction spending figures from the US, are the headline acts for the session.

On the central bank front, the US Federal Reserve will release the minutes of of its December FOMC monetary policy meeting, an event where the Fed raised the funds rate by an additional 25 basis points.

Most of the focus will likely be on the commentary relating to the inflation outlook given the Fed's underlying CPI forecasts were left unchanged at this meeting despite most members factoring in the impact of tax xcuts delivered by the Trump administration in late December.

The minutes will arrive at 6am AEDT Thursday in Australia.

Oil prices are at their highest levels since 2015 .
Oil's rally is continuing, with benchmark Brent crude now trading at a two-year high above $US69 a barrel. Prices climbed by as much as 2% overnight and have since consolidated in Asian trade. It marks a gain of around 11% since mid-December.© Provided by Business Insider IncDevelopments in the middle east provided the catalyst for the latest rally, according to Greg McKenna at AxiTrader."What’s driven the price action overnight is continued focus on the fact OPEC won’t move quickly to plug any disruptions to supply from either Iran or Venezuela," McKenna said.

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