- The Aud/USD pauses in the resistance of the triangle while the bulls look towards Australian retail sales.
- The US dollar is still under pressure before the ADP employment change report on Wednesday.
- The Australian dollar can continue to benefit from the weakness of the US dollar, with firm resistance at 0.6600.
The Australian dollar (AUD) remains stable against the US dollar (USD) on Tuesday, with the audistas of the aud/USD pointing to a possible break over 0.6600.
In the United States, concerns about fiscal and monetary policy have continued to press the demand for the dollar.
With the AUD/USD threatening to break above the upper limit of an ascending triangle pattern, the 61.8% of the fall from September to April continues to support support about 0.6550.
While the formation of a doji candle in the daily chart indicates a possible pause in the bullish impulse, Wednesday’s retail retail sales data can serve as an additional catalyst for the short -term movement.
The AUD/USD continues in conflict before Australian retail sales and US ADP data.
Australian retail sales are expected to increase 0.3% in May after contracting 0.1% in April. This data set is important as it reflects the trends in consumer spending and provides information on the resilience of the Australian economy. This is also closely monitored by the Bank of the Australian Reserve (RBA) and influences the expectations of interest rates.
For the United States, Wednesday’s economic calendar brings the June employment change report to the focus, shedding light on the employment trends of the US private sector.
As the Fed remains committed to monitoring incoming employment and inflation data before reducing interest rates, this employment report can influence the possible trajectory of interest rates.
On Tuesday, the president of the Federal Reserve (Fed), Jerome Powell, spoke at the European Central Bank forum (ECB) in Sintra, Portugal.
When asked about the trajectory of monetary policy, Powell declared: “It will depend on the data, and we are going to meeting by meeting. I would not rule out any meeting or put it directly on the table. It will depend on how the data evolves.”
These comments suggest that the Fed does not rush to cut rates, increasing the possibility of a cut in September instead of one in July.
With the data of the ISM manufacturing and US Jolts on Tuesday, overcoming the expectations, the US resilient data continue to support a more dependent Fed Fed.
The AUD/USD looks for a new catalyst while the bulls are heading around 0.6600
From a technical point of view, the AUD/USD is threatening to break the ascending triangle pattern with the bulls anxious to bring prices to psychological resistance at 0.6600.
A decisive daily closure above 0.6600 could trigger an impulse towards the maximum of November at 0.6688 and the fibonacci setback of 78.6% of the fall from September to April at 0.6722.
At the bottom, the initial support is marked by the FIBO level of 61.8% in 0.65495, followed by the confluence of the exponential mobile socks (EMA) of 50 days and 200 days in 0.6458 and 0.6430, respectively.
Aud/USD Daily Graph
A rupture below the triangle support about 0.6470 would indicate a loss of bullish impulse and could trigger a fall towards the 50.0% decline in 0.6428.
The relative force index (RSI) is approaching the 61st mark, reflecting a bullish bias that is not yet indicative of overcompra conditions.
This suggests that the pair can have room to move up, if justifies a decreasing feeling in the US or fundamentals of support in Australia.
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.
