- Applications for unemployment subsidy in the US and the 30 -year bond auction add complexity to the Perspective of the Fed.
- The Aud/USD builds bullish impulse as the torque approaches the psychological resistance at 0.6600.
- The feeling around the US dollar is still fragile while investors expect clearer economic signals.
The Australian dollar (AUD) is recovering confidence against the US dollar (USD) on Thursday, with the AUD/USD quoting about 0.6580 at the time of writing. The last movement has been backed by a rebound in the appetite for risk and a cautious feeling around the US dollar.
The applications for unemployment subsidy in the US and the 30 -year bond auction add complexity to the Perspective of the Fed
The feeling of the market in the US was promoted after the publication of the weekly data of initial applications of unemployment subsidy, which fell to 227,000, its lowest level in seven weeks, reinforcing confidence in the resilience of the labor market.
However, continuous requests increased to a new maximum in several years, which suggests that the recontraction could be decelerated, adding nuances to the narrative of the exchange between inflation and employment.
The Federal Reserve officials (FED), including the president of the Fed of St. Louis, Alberto Musalem, adopted a cautious tone on Thursday. Musalem said that the labor market is close to full employment, but warned that recent US tariffs could reactivate inflation.
In echo to this, the minutes of the FED meeting published on Wednesday revealed that most officials were reluctant to cut interest rates in the short term, citing uncertainty about the duration and intensity of tariff induced inflation.
Separately, the US 30 -year bond auction, held on Thursday, cleared at 4,889%, its highest level since the beginning of June. The result suggests a weak demand for long -term bonds and reinforces the upward pressure on yields, an obstacle to assets that do not generate performance such as gold, although it did little to derail the strength of the audience.
The Aud/USD bullish breakup potential is built above 0.6600
The Aud/USD daily graph shows a bullish perspective, backed by a recent golden cross, where the 50 -day exponential mobile (EMA) has crossed over the 200 -day EMA, a positive signal for buyers.
The torque is being negotiated within an ascending channel and is currently threatening to break the support, found at the key level of fibonacci recoil of 61.8% about 0.6550.
A successful rupture above the level of psychological resistance at 0.6600 could pave the way for more profits towards the maximum of November, around 0.6680, and the Fibonacci level of 78.6% in 0.6722.
The relative force index (RSI) is about 59, indicating a bullish impulse without entering the territory.
At the bottom, the 50 -day EMA at 0.6480 and the 200 -day EMA in around 0.6438 provide a strong dynamic support. If these levels fail to stay, the price could fall towards the 50% fibonacci setback, located about 0.6428. In general, the technical structure favors a continuous ascent while the price is maintained above the key mobile socks and within the ascending channel.
Australian dollar – frequent questions
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.
