The Australian dollar surged higher overnight, breaking through the 77 US cent mark, and hitting levels not seen for around 6 months.
Around 7am the Aussie was up 0.7% or so at 77.17 US cents, the highest the currency has been since April. It peaked overnight at 77.29 US cents, according to Bloomberg.
The surge followed rises in some commodity prices overnight, such as oil which hit 15-month highs, and a slip in the value of the US currency.
The release of the Beige Book for the Fed meeting the week after next raised queries about the need for a rate cut (the comments suggested the economy was growing modestly and without much strain on employment or wages). That helped undermine the greenback as investors questioned the need for a rate rise in December.
But a big factor for the Aussie dollar was the growing realisation that official Australian interest rates are not going to be changed for some time as thew Reserve Bank sits and assesses the outlook for the local and global economies.
Oil rose as much as 3.3% to the highest since July 2015. The US Energy Information Administration reported a surprise 5.25 million-barrel drop in US in crude stocks last week to their lowest level since January. Production dipped as well.
Brent for December settlement rose $US1.24 to $US52.92 a barrel in London. US crude futures closed up 2% at just over $US51 a barrel. Gold futures rose half a per cent to $US1,270 on Comex in New York.
Elsewhere overnight, base metals were mixed in London trade. Zinc rose, lead was bid higher and tin surged. In contrast, copper, nickel and aluminium all closed down. Wall Street edged higher as banks and energy stocks advanced.
Iron ore was around $US58 a tonne in China late yesterday, the highest for a month. Coal prices rose again on spot markets.
In other currency market developments, the euro fell against the US dollar as investors focused on whether European Central Bank president Mario Draghi will give any indications that the central bank will begin tapering its bond purchase program when it meets tonight, our time.
The greenback has rallied around 3 per cent since the end of September, mirroring a climb in benchmark US Treasury yields to a four-month high above 1.8 per cent.
Wall Street closed highr, with energy companies the biggest gainers of the day as crude prices climbed nearly 2%. Sentiment was also lifted by stronger-than-expected quarterly results from Morgan Stanley (completing a series of upbeat reports from major banks such as Goldman Sachs, Citi and JPMorgan), as well as the Federal Reserve’s Beige Book, which indicated that the US economy was continuing its modest, steady expansion.
The Dow closed up 41.23 points, or 0.2%, to close at 18,203.17. The S&P 500 rose 4.74 points, or 0.2%, to end at 2,144.33. The Nasdaq edged up 2.58 points, or 0.05%, ending at 5,246.41. Gains in the tech-heavy Nasdaq were limited by Intel, which tumbled 5.9% after giving a weak revenue outlook.
Our market could be up less than 10 points later this morning, judging by the subdued activity on the overnight futures market.
