Aussie firmly higher on Trump talk

The local unit was above US75.5 cents in mid-afternoon, following the greenback’s fall on Trump’s comments.

The Australian dollar was caught up in Donald Trump’s comments on the greenback.

The Australian dollar was higher in midafternoon trade on Wednesday, as the US dollar dropped to its lowest level in a month after Donald Trump suggested to The Wall Street Journal he favoured a weaker dollar.

The president-elect in an interview published on Monday described the dollar as “too strong.” Mr Trump’s remarks represent a departure from a bipartisan tradition where presidents generally leave commentary about the US currency to the Treasury Department.

The US dollar fell 1.3 per cent against a basket of major peers to its lowest level since December 7. The currency has now given back nearly half of its post-election rally, which drove the greenback to its highest level in more than 14 years.

At 3.54pm (AEDT), the Australian dollar was at US75.51 cents, up from US74.71c late on Tuesday.

The Australian dollar also caught the tailwind of a rising British pound.

Following a much anticipated speech on the UK’s Brexit process by UKPrime Minister May, the pound surged by 3 per cent. Sterling started its upward drift before the prime minister’s speech mainly because of US dollar weakness and a higher than expected UK CPI.

Locally, the Westpac Melbourne Institute Index of Consumer Sentiment rose just 0.1 per cent for January after December’s 3.9 per cent drop, putting the reading up 0.1 per cent from a year earlier.

“The absence of a rebound in January is a disappointing result — particularly when one factors in the cumulative 10 per cent gain for Australian equities over the past two months and, to a lesser extent, a nascent improvement in the pace of job creation,” Westpac said in a statement.

December employment data will be key for the currency on Thursday. Employment is expected to rise 10,000 in the month with the unemployment rate at 5.7 per cent, according to economists.