Dollar lower as oil price eyed

Traders are seen selling off the Aussie in a bid to profit from the oil price rally.

The Australian dollar is lower as traders take profits amid a rise in oil prices.

At 1.12pm (AEST) on Thursday, the currency was trading at 73.36 US cents, down from 73.76 cents on Tuesday.

OANDA Asia and Pacific senior trader Stephen Innes says a surprise fall in US oil inventories lifted crude prices, which boosted commodity currencies.

However, he says traders have since began selling off the Aussie in a bid to profit from the oil rally.

“We saw the Aussie bounced off yesterday’s lows testing the 74.00 US cents level on the back of surging oil prices,” he said in a note.

“The Aussie has since come under renewed pressure as traders continue to sell it on commodity price inspired rallies.” He said traders would be watching equity markets for the rest of the week given the Aussie’s high correlation with risk events. However, he expects the currency to trade in a tight range for the rest of this week.

“The Aussie is in consolidation mode after finding a solid wall of resistance at 73.00 US cent level,” Mr Innes added.

“Traders are very comfortable keeping positions light and powder dry ahead of Friday’s US Retail sales (figures).”

AAP