- The AUD/USD rises slightly about 0.6400 on Wednesday, but remains in a lateral range for more than a week.
- The US economy is expected to have grown 0.4% in the period from January to March.
- The data of the middle CPI trimmed from the RBA of the first quarter fell within the range of the central bank of 2%-3%.
The Aud/USD torque is negotiated slightly higher than 0.6400 during Wednesday’s European negotiation hours. The Aussie torque rises as the US dollar (USD) gains ground before a series of economic data in the United States (USA), notably the Gross Domestic Product (GDP) of the first quarter, which will be published in the US session.
However, the torque has been in a lateral range for more than a week amid the uncertainty about commercial relations between the US and China. The hopes of a decala in the commercial war between Washington and Beijing have vanished as the struggle between them has become more a matter of “dominance.”
The US Treasury Secretary, Scott Besent, declared on Monday that China should initiate commercial conversations. “I think it depends on China descalear, because they sell us five times more than we sell them,” Besent said.
The US dollar index (DXY), which follows the value of the dollar against six main currencies, rises about 99.45.
Economists have anticipated a moderate economic growth of the US of 0.4% in the first quarter of the year in annualized terms, much slower than the expansion of 2.4% recorded in the last quarter of the previous year. The forecasts of lower economic growth in the US seem to be a consequence of the tariffs imposed by US President Donald Trump to his commercial partners.
In addition, investors will also focus on US ADP employment data for April and the Personal Consumer Expenses Price Index (PCE) for March, which will influence market expectations on the monetary policy perspective of the Federal Reserve (FED).
In the Australian region, the Consumer Price Index (CPI) half trimmed from the RBA of the first quarter moderately grew by 2.9%year -on -year, as expected, slower than the previous 3.3%publication, upward revised from 3.2%. The underlying inflation data has fallen within the RBA range of 2% -3% for the first time since the last quarter of 2021. Weak inflation data has increased the expectations of the market that the RBA could reduce interest rates in the May policy meeting.
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.
