Aussie dollar hits three-month high on weak US data

Aussie dollar

The Aussie dollar is refusing to roll over, soaring to a three-month high on the back of disappointing US economic figures.

At 0700 AEDT on Friday, the local unit was trading at 73.56 US cents, up from 73.17 cents on Thursday.

The Aussie dollar surged to 73.72 US cents overnight, supported by a weaker greenback across the board.

US factory orders and durable goods disappointed, ANZ senior manager FX Sam Tuck said.

And, despite an improvement in the headline non-manufacturing ISM, markets focused on the employment sub-component, which dropped into contractionary territory.

He said that the Aussie dollar is decidedly up and heading higher.

‘But that’s driven primarily by US-dollar flows, and tonight we’ve got US payrolls which could change things around quite dramatically,’ he added.

The US employment report is tipped to still be a source of strength for the economy but, Mr Tuck said, he’ll pay particularly close attention to wages growth.

On the domestic front, retail sales figures could drive currency direction.

‘The run of positive Australian data is set to continue for the moment with markets expecting 0.4% growth in January,’ Mr Tuck said.

This is based on the release of retail figures, due out on Friday 4 March, that are expected to show shoppers gained some momentum at the start of the year after an underwhelming pre-Christmas sales season.

Spending is forecast to have risen 0.4% in January, following a flat result in December, seasonally adjusted.

Westpac economists said consumers shrugged off global financial market turmoil in early 2016 while business surveys continued to show some softening for consumer-related sectors