- The AUD/USD attracts some buyers about 0.6500 in the first Asian session on Monday.
- The US non -agricultural payrolls increased by 139,000 in May, more than expected.
- China’s CPI inflation for May will be at the Care Center later on Monday.
The aud/USD torque moves up to 0.6500 during the first Asian session on Monday. The Australian dollar (Aud) is strengthened against the US dollar (USD) after the US president Donald Trump said that the United States (USA) will carry out commercial conversations with China on Monday.
Trump declared Friday that US Treasury Secretary Scott Besent, and two other Trump administration officials are scheduled to talk to Chinese officials in London on Monday. Commercial conversations occur while the US and China have discussed numerous issues in the middle of a commercial war in climbing. However, the hope of potential commercial negotiations between the two largest economies in the world provides some support to the AU, which acts as Proxy of China, since China is an important commercial partner of Australia.
On the other hand, US economic data stronger than expected could boost the dollar and act as a wind against the pair. The data published by the US Labor Statistics Office (BLS) on Friday showed that non -agricultural payroll (NFP) in the US increased by 139K in May, followed by the increase of 147K (reviewed since 177K) observed in April. This reading was better than the 130K market expectation.
Meanwhile, the unemployment rate remained stable at 4.2% in May, as expected. Annual salary inflation, measured by the change in average gains per hour, remained at 3.9% in May, exceeding the estimate of 3.7%.
The operators prepare for the inflation reports of the Consumer Price Index (CPI) and the China Balance for May, which will be published later on Monday. If the data shows that inflation in China is relieved, this could drag the AUD out against USD in the short term.
Faqs Australian dollar
One of the most important factors for the Australian dollar (Aud) is the level of interest rates set by the Australian Reserve Bank (RBA). Since Australia is a country rich in resources, another key factor is the price of its greatest export, iron mineral. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and commercial balance. The feeling of the market, that is, if investors are committed to more risky assets (Risk-on) or seek safe shelters (Risk-Off), it is also a factor, being the positive risk-on for the AUD.
The Australian Reserve Bank (RBA) influences the Australian dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of the interest rates of the economy as a whole. The main objective of the RBA is to maintain a stable inflation rate of 2% -3% by adjusting the interest rates or the low. Relatively high interest rates compared to other large central banks support the AU, and the opposite for the relatively low. The RBA can also use relaxation and quantitative hardening to influence credit conditions, being the first refusal for the AU and the second positive for the AUD.
China is Australia’s largest commercial partner, so the health of the Chinese economy greatly influences the value of the Australian dollar (Aud). When the Chinese economy goes well, it buys more raw materials, goods and services in Australia, which increases the demand of the AU and makes its value upload. The opposite occurs when the Chinese economy does not grow as fast as expected. Therefore, positive or negative surprises in Chinese growth data usually have a direct impact on the Australian dollar.
Iron mineral is the largest export in Australia, with 118,000 million dollars a year according to data from 2021, China being its main destination. The price of iron ore, therefore, can be a driver of the Australian dollar. Usually, if the price of iron ore rises, the Aud also does, since the aggregate demand of the currency increases. The opposite occurs when the price of low iron ore. The highest prices of the iron mineral also tend to lead to a greater probability of a positive commercial balance for Australia, which is also positive for the AUD.
The commercial balance, which is the difference between what a country earns with its exports and what it pays for its imports, is another factor that can influence the value of the Australian dollar. If Australia produces highly requested exports, its currency will gain value exclusively for the excess demand created by foreign buyers who wish to acquire their exports to what you spend on buying imports. Therefore, a positive net trade balance strengthens the AUD, with the opposite effect if the commercial balance is negative.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
