Aussie dollar up amid offshore equity, commodity price fall

The Australian dollar has gained in overnight trade in a session marred by volatility as European equities suffered heavy losses and oil prices collapsed to fresh 12-year lows.

At 0700 AEDT on Thursday, the local unit was trading at 68.98 U.S. cents, up from 68.64 cents at Wednesday's Asian close.

The Australian dollar slumped to 68.28 U.S. cents overnight as risk aversion took hold early in the session, however later rallied with U.S. equities as they recovered lost ground following the release of local inflation data.

"(The Australian dollar was) relatively resilient in the circumstances given the negative sentiment towards oil/commodities overnight," National Australia Bank director and senior economist David de Garis said.

Commodities and oil declined sharply overnight with benchmark Brent crude slumping to 27.10 U.S. dollars a barrel and West Texas Intermediate tumbling 8 percent to a fresh 12-year low.

Risk sentiment is starting to come back into markets, albeit to a degree, following the release of U.S. consumer price data which was slightly softer than market forecasts on the drop in energy, though core CPI was 2.1 percent per annum.

"The markets have really picked up on that," OM Financial senior client advisor Stuart Ive said.

"The Aussie then started to claw back up and in the past two hours it has really triggered to the upside."

Risks to the Australian dollar still remain to the downside as expected weakness in equities is likely to weigh on the unit, Commonwealth Bank of Australia currency strategist Joseph Capurso said.

At 1019, the Australian dollar was trading at 69.23 U.S. cents.

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