- The Aud/USD bounces strongly towards the upper part of the 0.6400 after the US US NFP.
- The US dollar loses its brightness as traders see a possible cutting cuts of the Fed in September.
- The final manufacturing PMI of S&P global in Australia remained strong in July.
The now generalized recovery in the galaxy linked to risk provides additional oxygen to the Australian dollar (Aud), sending the aud/USD back to the proximity of the key resistance area around 0.6500 on Friday.
The AUD/USD finds support about 0.6400
The torque advances at maximum of two days within the range of 0.6480-0.6490, marking a positive ending for the week, since it gains a strong impulse after the disappointing report of non-agricultural payrolls of the USA for July (+73k jobs).
Meanwhile, the US dollar (USD) continues to lose impulse as market participants evaluate the additional cooling of the US labor market, which could lead to a rate cut by the Fed after the summer break.
At the local level, the final manufacturing PMI of S&P global stood at 51.3 in July, while the prices of the producers rose 0.7% intertramestral in the second quarter and 3.4% compared to the previous year.
What about the technicians?
The transitory resistance arises in the 55 -day SMA at 0.6504, before the 2025 peak at 0.6625 (July 24) and the maximum of November 2024 in 0.6687 (November 4).
In the lower part, the initial support is located on the weekly soil at 0.6418 (August 1), before the 200 -day SMA critics in 0.6391.
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.
