- The AUD/USD gains ground after the publication of national medium -level economic data on Wednesday.
- The secretary of the US Treasury, Besent, and the Commerce Representative, Greer, will meet with the Vice Prime Chinese Minister, He Lifeng, in Geneva.
- The Fed is expected to keep the rates stable later in the American session.
The Aud/USD pair continues its bullish impulse per fourth consecutive session, around the level of 0.6510 during Wednesday’s Asian negotiation hours. The Australian dollar (Aud) finds support in the publication of national medium level economic data and in the improvement of global commercial feeling.
In April, the AIG industry index rose 5.1 points to -15 in seasonally adjusted terms, pointing out a modest improvement despite the winds against persistent in the industrial sector. Challenges such as global commercial uncertainty, currency volatility and the imminent federal choice continued to weigh on the activity. Meanwhile, the AIG manufacturing purchasing managers index (PMI) rose 3.0 points to -26.7, from -29.7 in the previous month.
The feeling towards the audience also improved as commercial tensions between the US and China showed signs of relief. In a significant development, the US Treasury Secretary, Scott Besent, and the trade representative, Jamieson Greer, will meet with the Vice Primer Chinese Minister, He Lifeng, in Geneva during the weekend, marking the first high -level conversations since the US imposed tariffs that climbed into a global commercial dispute.
The China Ministry of Commerce declared that, after carefully evaluating US proposals and considering global expectations, national interests and industry comments, Beijing has agreed to participate in the next negotiations.
Looking ahead, the attention of investors is firmly focused on the Federal Reserve (Fed) decision later on Wednesday. While the Fed is expected to maintain the stable rates, the markets will examine the comments of the president of the FED, Jerome Powell, in search of indications of a possible change towards cuts of rates in the short term.
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.
