- AUD/USD advanced for the second day of four, up 0.41%.
- Nervousness over China-Taiwan disputes keeps investors unsettled, although risk-sensitive currencies in the FX space are appreciating.
- Mixed economic data out of the US keeps the USD affected as DXY falls 0.50%.
The AUD/USD rises during the American session from weekly lows around 0.6880, despite mixed investor sentiment due to rising tensions following US House Speaker Pelosi’s visit to Taiwan, with Chinese military drills that deployed missiles and more than 100 aircraft, in response to the trip.
AUD/USD is trading at 0.6972, after hitting its daily low at 0.6934 earlier in the Asian session. However, as North American traders hit their desks, the Aussie strengthened, with the pair reaching a daily high of 0.6989 before settling around current exchange rate levels.
AUD/USD rises, despite positive US data.
US equities falter as sentiment remains fragile. Based on mixed US economic data, AUD/USD fell from daily highs towards 0.6945. Initial jobless claims for the week ending July 30 rose to 260,000, up from an estimated 259,000, illustrating that the labor market is losing. At the same time, the US trade balance saw the US deficit shrink to -$79.6bn from an estimated -$80.1bn, while exports increased compared to imports.
Despite the US data keeping traders hopeful that a recession will not strike, AUD/USD bounced once analysts digested the data, but the pair failed to reach its daily high.
Meanwhile, the dollar index, a gauge of the dollar’s value against a basket of peers, fell 0.50% to 105,867, supported by falling US Treasury yields, led by Treasury bond yields. to 10 years, which stands at 2,674%, with a decrease of three basic points.
On the Australian side, the trade balance posted a surplus of A$17.7 billion in July, compared to A$12.3 billion in June. Australia has benefited from exports of iron ore, LNG gas and coal. However, its biggest trading partner, China, has tried to limit its reliance on coal imports, and its steel output is set to weaken later this year.
Analysts at ANZ commented that “given this and the fact that commodity prices appear to have peaked, we believe the trade surplus will start to slide soon”.
In Australia, the monetary policy statement of the Reserve Bank of Australia (RBA) and the AIG services index will be published.
In the United States, non-farm payrolls for July will be published, which are estimated at 250,000, down from 372,000 in June. The unemployment rate is expected to remain unchanged at 3.6%.
Key technical levels
Source: Fx Street
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