- The US dollar index weakens, falling to 99.40 in the midst of an increase in the Taiwan dollar and the decrease in commercial concerns between the US and China.
- The Australian dollar is strengthened, reaching a maximum of five months about 0.6500, promoted by the electoral victory of the Labor Party.
- ISM services PMI rises to 51.6, reflecting a positive economic activity in the US services sector..
The Aud/USD torque shot on Monday, reaching a new five months close to the level of 0.6500. The Australian dollar (Aud) benefits from a series of factors, including the weakness of the US dollar (USD), a solid US economic report and strengthening the feeling of global risk.
The yield of the Australian dollar also reflects a broader optimism derived from the victory of the Labor Party of Anthony Albanese in the Australian parliamentary elections, which indicates the continuation of stable economic policies. Meanwhile, ongoing commercial conversations, particularly between the US and China, have contributed to a change in the feeling of the market.
What moves the market today: the ISM promotes the services sector, commercial conversations between the US and China weigh on the USD
- The victory of the Labor Party in Australia is considered positive for the country’s economic perspectives, although uncertainties persist on commercial relations between the US and China.
- The American dollar index (DXY) continues to face down pressure, mainly due to the chain effects of a strong increase of 5% on the Taiwan dollar (TWD).
- The revaluation of the TWD, which is linked to the expectations of a commercial agreement with the US, has undermined the dollar, with key currencies such as Japanese Yen (JPY) and the Australian dollar (AUD) benefiting from this change.
- Meanwhile, national data and ISM services PMI (51.6) also cushion the bearish feeling around the US dollar, helping to mitigate some of its losses.
Technical analysis: the aud/USD continues its bullish career with positive indicators
The Aud/USD torque is showing a general bullish signal, quoting around 0.6500, with an increase of 0.50% in the day, and standing in an average range between 0.6434 and 0.6494. The Relative Force Index (RSI) is 62.42, pointing out a neutral impulse, while the Mobile Sox Convergence/Divergence Indicator (MACD) is giving a purchase signal. The stochastic %K Lee 78.67, with the amazing oscillator at 0.01, both indicating a neutral impulse for the moment.
The key mobile socks continue to reinforce the upward perspective: the 20 -day SMA (0.6344), the 100 -day SMA (0.6283) and the 200 -day SMA (0.6461) suggest all a purchase signal. In addition, the EMA of 10 days (0.6406) and the SMA (0.6404) are both bulls. Support levels are identified in 0.6461, 0.6435 and 0.6411, with resistance at the key psychological level of 0.6500.
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.
