Forex Market Update: Australian Dollar Pulls Back From Fresh Yearly High

AUD/USD is pivoting around 0.7800, consolidating its latest gains after rising to fresh trend highs of 0.7822 in early Asian trading. Commodities such as oil and copper have retreated, along with the CRB index, as the U.S. stock slump raised concerns over the global economic outlook. The one positive in commodities for AUD was gold which rose to a two-month high. Asian buying was among the flows that helped prop up AUD overnight, but the move was largely a reflection of the USD sell-off. The AUD is being dominated by external factors rather than internal. In that vein, a research report from the RBA states that last year’s steep fall in the AUD was driven by hedge funds and speculator with real economic factors playing a very limited role. The research says that the AUD was a proxy for emerging market exposure and notes some of the sharpest moves had no new information or domestic or global economic data behind the move. For AUD, the next real focus will be the June 2nd RBA rate decision. Next week sees a light calendar with Q1 construction work done, RBA Battellino speaking, Q1 private capex and Apr RBA credit aggregates. The credit data will be watched closely for signs of improvement. Give the aggressive bullish views that have emerged on EUR and GBP today, by extrapolation, AUD could reach 0.8000 though dealers feel current gains are overdone and 0.8000 may not match fundamentals for the AUD.