Rocky Balboa was famous for taking plenty of body blows, hanging in there and finally delivering the knock-out punch in the end. The Australian Dollar (AUD) channelled some of that strength yesterday after a number of recent blows this week to the AUD, the local share market and commodity prices it has rebounded well, above 0.70c against the USD, 0.46p against the GBP and 0.63c against the EUR late on Thursday.
Even though we still have many experts predicting the fall of the AUD/USD to 0.65c by the end of the year, the Aussie is not going down without a fight. Not allowing itself to get too far away from the 0.70 mark, reaching a low of 0.6943 this week before bouncing back to a high of 0.7085 overnight.
Thursday’s Chinese PMI data although still in contraction came in slightly above the expected figure of 49.7 at 49.8 which seemed to spur on the Aussie which continued on an upward trend throughout the day. Copper has surged four percent this week which combined with the Chinese figures to give the AUD a boost on Thursday. “We also saw some stability in Glencore’s share price, that’s probably helped the underlying commodities, copper in particular” said Robin Bhar, head of metals research at Societe Generale in London. Glencore’s shares slumped 29 percent on Monday, however rebounded 17 percent on Tuesday.
The local currency will hope to continue its upward trend with Retail Sales results due at 11:30am this morning. A positive outcome is expected with a result of 0.4% up from -0.1% in August. If this comes in as forecast we should see a continued increase in the AUD.
Overnight saw the release of USD Manufacturing for September which was delivered below forecast unable to reach the August figure of 50.6 coming in at 50.2 which kept the AUD/USD trading above 0.70 overnight. Rounding out the week sees another important evening of announcements from the US. Friday will see the September unemployment rate released, which is forecast to remain steady at 5.1% from August. Non-farm payrolls are also released this evening and are expected to increase from 140K to 197K.
Investors will then look forward to the RBA decision on Tuesday to see if the AUD can continue its rally and get the USD against the ropes. Whether or not it does prevail like a Hollywood blockbuster, it’s definitely got the drama of a good old fashioned soap opera.
At 08:30am this morning the AUD/USD exchange rate was trading at 0.7033
AUD/GBP – 0.4645
AUD/EUR – 0.6281