The Australian dollar has retraced some of the ground it has lost against its major currency peers regaining almost a fifth of a cent against the US dollar.
At 0635 AEST on Wednesday, the Australian dollar was worth 73.83 US cents, up from 73.65 US cents on Tuesday.
Westpac analysts say markets had retained their risk averse sentiment with the focus still on the China-US trade tensions, with the US dollar remaining strong.
‘The US dollar and yen were the best performing currencies, while interest rates were mixed,’ the said in a morning note.
‘The US dollar index is up 0.4 per cent on the day. EUR fell from 1.1640 to 1.1530 before partly rebounding to 1.1588. Safe-haven JPY outperformed, USD/JPY making a roundtrip from 110.05 to 109.56 and back.
‘(The) AUD fell further in London from 0.7375 to 0.7347 – the lowest since May 2017 – before rebounding to 0.7385.’
With no major economic data to drive markets overnight the main event risk for the local currency would be Reserve Bank of Australia governor Philip Lowe’s panel participation, alongside Federal Reserve chair Jerome Powell at the Central Banking Forum in Portugal, the analysts said.
With the Australian dollar’s key support levels broken yesterday, ‘the next major downside target now is 0.7330 (a May 2017 low)’, the analysts said.
‘The US-China trade spat remains the main near-term headwind.’
The Aussie dollar has also recovered a bit against the yen and the euro.
CURRENCY SNAPSHOT AT 0635 AEST ON WEDNESDAY
One Australian dollar buys:
* 773.83 US cents, from 73.65 on Tuesday
* 81.29 Japanese yen, from 80.77 yen
* 63.71 euro cents, from 63.58 euro cents
(*Currency closes taken at 1700 AEST previous local session)