- The aud/usd jumps to a new maximum of four months above 0.6400 while the US dollar collapses.
- The US president Trump continues to criticize Powell of the Fed for not reducing interest rates.
- Trump’s tariff policies keep the Australian dollar on alert.
The Aud/USD pair records a new four months above 0.6400 on Monday. The Australian pair is strengthened while the US dollar (USD) is still beaten by the president of USA (USA) Donald Trump, who threatens the “autonomous” status of the Federal Reserve (Fed).
The US president Trump has threatened to say goodbye to the president of the FED, Jerome Powell, for not lowering interest rates. On Friday, Trump said: “Fed really owes American people to lower interest rates. That is the only thing for which it is good.” “I’m not happy with him. If I want him to leave, he will leave very fast, believe me,” Trump added. These comments occurred after Jerome Powell He affirmed that the economy is well enough to wait for adjustments in monetary policy until the Fed obtains greater clarity on how new economic policies will shape economic perspectives.
During the negotiation hours in North America on Monday, Trump criticized Powell again for supporting a “waiting and seeing” approach about interest rates. “There may be a deceleration of the economy unless Mr. Too late, a great loser, lowers interest rates, now,” Trump said through a publication on Truth.Social.
Meanwhile, the Australian dollar (Aud) does not yield as its peers, except the US pairs, amid uncertainty about commercial relations between the US and China. However, Washington hopes there may be an agreement between them. “We are sure that it will work with China,” said US Secretary of Commerce Howard Lutnick during the weekend.
Given the significant dependence of the Australian economy of its exports to China, the uncertainty about Beijing’s economic prospects weighs on the Australian dollar.
The AUD/USD breaks above the 0.6400 key resistance drawn from the maximum of February 20, which coincides with the 200 -day exponential mobile (EMA) average. An upward crossing of the EMAS of 20 and 50 days about 0.6285 indicates that the short -term trend is strongly bullish.
The 14 -day relative force (RSI) index rises above 60.00. A new bullish impulse would arise if the RSI remains above the level of 60.00.
More increases would appear towards the round level resistance of 0.6500 and the maximum of November 25, 0.6550 if the torque breaks above the maximum of December 5, 0.6456.
On the contrary, a downward movement below the minimum of March 4, 0.6187 towards the minimum of February 0.6087, followed by the psychological support of 0.6000.
Aud/USD Daily Graph
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.
