Aussie dollar breaks 72 US cents on greenback rout

Aussie dollar #4

Tightening financial conditions in the US have pushed the Aussie dollar up against the greenback, the local currency going above 72 US cents overnight

The Aussie dollar has breached 72 US cents after the greenback suffered a fourth straight day of losses.

At 0700 AEDT on Friday, the local unit was trading at 72.03 US cents, up from 71.72 cents on Thursday.

The currency surged to a one-month high of 72.43 US cents earlier in the session.

Overnight, the US dollar index fell to a three-month low on cautious remarks from a US Federal Reserve official that tempered expectations of a rate rise.

‘Dallas Fed President (Robert) Kaplan emphasised the need for patience in the normalisation process,’ Westpac strategist Imre Speizer said.

‘(He) said financial conditions had tightened, which have been consistent themes from the Fed speakers lately.’

He tipped the Aussie to maintain its upward momentum, targeting 73.05 US cents next.

The key local risk events on Friday will be retail sales data plus the Reserve Bank’s Statement on Monetary Policy, which will be inspected for any dovish shifts in its forecasts.

Then, traders will prepare for a US January jobs report on Friday night, with an employment gain of 190,000 expected.