- Australia’s trade balance surplus, Chinese stimulus and US dollar weakness fueled AUD/USD higher.
- US initial jobless claims rose more than expected, showing a moderation in the labor market.
- The Fed’s Waller and St. Louis Fed President Bullard will give remarks.
AUD erases Wednesday’s losses and rises towards the 14 June low around 0.6850, but has faced some resistance and has pulled back some 25 pips towards the 0.6820 area. At 0.6839, the AUD/USD shows an optimistic mood in the market, which increases the appetite for riskier assets.
AUD/USD rises on positive sentiment, rising iron ore prices and US dollar weakness
Global equities are trading higher, buoyed by easing recession fears and China allowing local governments to issue $220 billion of debt in an infrastructure program to boost 2022 GDP. Meanwhile, a senior US Secretary of State official said that Secretary Blinken would not announce the lifting of tariffs on Chinese goods in his meeting with the Chinese Foreign Minister.
AUD/USD was bolstered by positive data from the Asian session. Australia’s trade balance posted a surplus of 9.5% mom in May, beating expectations, driven by rising exports of coal, coke and briquettes. Additionally, iron ore prices rose to $115.14 a tonne, which was a tailwind for the dollar.
That said, AUD/USD broke above the 0.6800 level and extended its gains to hit the daily high around the R2 daily pivot at 0.6848.
Meanwhile, in the US, jobless claims for the week ending July 2 were released. The figures were higher than expected, although the labor market showed moderation. In addition, the trade balance reduced the deficit from -86.7 billion dollars to -85.5 billion dollars, thanks to the increase in exports.
What to watch out for
The US calendar will feature Fed speakers throughout the week, with Christopher Waller and St. Louis Fed President James Bullard on Thursday. On Friday, New York Fed President John Williams will give remarks, and the June Non-Farm Payrolls report will shed some light on labor market conditions. Traders should also watch the half-hour earnings data for signs of a wage price spiral that could keep US inflation higher.
AUD/USD Key Technical Levels
Source: Fx Street
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