- AUD/USD manages to rise on Monday despite falling markets.
- The Aussie cut a streak of five days in a row with casualties.
- Lower rates in China favored the AUD, but the negative market environment limits strength.
The AUD/USD starts the new week on a positive note and breaks a five-day losing streak, recovering from one-month lows hit on Friday. The pair bounced as far as 0.6929, where it lost momentum. In the previous American session, it operates at 0.6910, moving away from the daily maximum.
Between China and the economic landscape
The People’s Bank of China (PBoC) lowered its benchmark rates for the second consecutive week in an attempt to support a slowing economy. This, in turn, offers some support to the Australian dollar. At the same time, a strong dollar caps AUD/USD.
The dollar extends its strong bullish trajectory and rises to the highest level since mid-July (measured by DXY) amid expectations of the Federal Reserve. Recent comments from various central bank officials suggest that the institution will maintain its tightening policy. This, coupled with a generally weaker tone around equity markets, continues to underpin the dollar as a safe haven and should act as a headwind for the aussie.
Therefore, it would be prudent to wait for strong follow-on buying before confirming that the recent sharp pullback from the two-month high has run its course and positioning for further gains. With no economic data ahead on Monday, traders’ focus could be on what happens to stocks on Wall Street, and Treasuries.
Technical levels
Source: Fx Street
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