Aussie dollar nears US74.5c as risk turns up

The local unit has rebounded sharply amid a recovery in oil prices and stronger risk appetite.

A recovery in oil prices and brief return of risk sentiment has helped push the Australian dollar above US74 cents again.

At 5.10pm (AEST) on Monday the currency was trading at 74.44 US cents, up from 73.93c at the same time on Friday.

OANDA Australia and Asia Pacific senior trader Stephen Innes said the Aussie had found decent support after oil prices recovered over the weekend.

“The overall risk sentiment (in the markets) also bounced after the temporary suspension of referendum campaigning in the UK,” he said in a note.

Mr Innes said there was also broad-based selling on the US dollar after the killing of UK MP Jo Cox caused an adjustment in risk-off positioning that was driving markets earlier last week.

Still, currency traders said they would remain cautious until the vote in the UK is held.

“In a very fluid situation, traders and investors will be reluctant to put too much faith in fluctuating pre-vote polls and betting markets,” said Ric Spooner, chief market analyst at CMC Markets.

Tuesday will bring the release of minutes of the Reserve Bank of Australia’s June 7 policy meeting, with economists expecting the central bank to indicate a neutral policy stance. The RBA left its cash rate unchanged at a record-low 1.75 per cent at the meeting, but surprised markets by not including an easing bias in its commentary.

“There are some modest upside risks to the Australian dollar from the minutes, unless the minutes unexpectedly reveal the RBA discussed a rate cut,” said Joe Capurso, currency strategist at CBA.

with AAP