Aussie dollar maintains strength in afternoon trade

The local unit has retained strength found in the wake of Thursday’s trade data, beating most peers.

The Aussie’s next move will depend on a couple of two important factors, said Greg McKenna, chief market strategist at AxiTrader.

The Australian dollar has been one of the strongest major currencies in the last 24 hours as global markets reacted to news Thursday of a record trade surplus in December.

At 4.15pm (AEDT) the local unit was changing hands at US76.49 cents, compared with US76.40c late on Thursday. It traded just below US77.00c overnight.

Traders were encouraged by the fact that the size of the trade surplus implied stronger economic growth in the fourth quarter, amid expectations the export surge will be supported by higher iron ore and coal prices for a while yet.

Not only does the better trade add to Australia’s growth in the December quarter but it will be something that the ratings agencies will have also noticed, given the focus on Australia’s AAA sovereign rating and some concern - now presumably less - over Australia’s current account deficit, said National Australia Bank senior economist David De Garis.

The Aussie’s next move will depend on a couple of two important factors, added Greg McKenna, chief market strategist at AxiTrader.

“We have the US non-farm payrolls coming out tonight, and we have to watch out for any further anti-US dollar rhetoric from the Trump administration,” Mr McKenna said.

Mr McKenna also pointed out that the Aussie dollar’s failure at US77 cents last night will remind traders of the difficulty the Aussie had in besting this level, or at least closing above, for much of the second half of 2016.

Dow Jones newswires