AUD / USD faces rejection once again near 0.7375

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  • AUD / USD benefits from USD weakness due to risk appetite and upbeat PMI from China.
  • The RBA maintains its monetary policy unchanged in December.
  • Focus shifts to US ISM PMI, vaccine news and Australia’s Q3 GDP.

The AUD/USD is retreating from daily highs of 0.7373, although it remains slightly positive on the day above the 0.7350 level during the European session and before the release of critical US data.

However, sentiment around the higher-yielding Aussie continues driven by market optimism, courtesy of the positive developments around the coronavirus vaccine, hoping for a quick economic recovery.

The Vaccine-Driven Market Optimism, Combined With Strong China Caixin Manufacturing PMI Data, reduces the safe haven demand of the US dollar, adding to the upward movement in the pair. Manufacturing activity in China expanded at the fastest pace in a decade last month, as the latest data published by Caixin on Tuesday showed.

The rally in global equity markets, especially with S&P 500 futures rising nearly 1%, reinforces the bullish tone in AUD / USD. The bulls are now awaiting critical US ISM Manufacturing PMI data and testimony from Fed Chairman Jerome Powell to continue the next momentum.

Furthermore, the focus remains on the RBA Governor Phillip Lowe’s speech and Australia’s Q3 GDP report to be released on Wednesday. Meanwhile, markets are also on the lookout for trade tensions between Australia and China and updates on vaccines.

Earlier in the day, the RBA left its key rate and QE purchases unchanged, while showing its willingness to do more if the economic recovery after the pandemic falters. The decision had little impact on the Australian dollar.

AUD / USD technical levels

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