The Australian dollar has rallied on the back of a broad greenback sell-off triggered by weaker-than-expected US economic data. At 7am (AEDT), the local unit was trading at US71.80 cents, up from US70.21 cents yesterday. The currency climbed to a one-month high of 71.88 US cents earlier in the session.
The US service sector expanded in January but at a slower pace than the previous month, causing the greenback to fall against most major currencies. “The service sector makes up around 80 per cent of economic activity,” ANZ senior FX manager Sam Tuck said. “This has caused markets to continue to question the ability of the US economy to accelerate in isolation.”
Westpac strategist Imre Speizer said dovish comments from a top US Federal Reserve official also hurt the US dollar overnight. New York Fed President William Dudley said in an interview that continued tightening of financial conditions would weigh on the decisions of the Fed’s policy board.