- The AUD/USD is negotiated around the 0.6400 area, bouncing strongly during the American session on Monday.
- Analysts point out that the AU is still vulnerable due to its exposure in China and the probable RBA rates reduction in May.
- A key resistance is observed about 0.6410, with technical indicators mostly aligned up.
The Australian dollar (AUD) regained ground on Monday, climbing to the area of 0.6400 during the American session, since the improvement in the feeling of risk and a US dollar (USD) in general weakest helped the aud/USD to shake the recent losses. The previous profits were driven by optimism around Chinese GDP, which grew by 5.4% year -on -year in the first quarter, exceeding forecasts. However, the rebound is still fragile in the midst of commercial tensions between the US and China and the role of Aud as proxy of Chinese demand.
The ING strategists continued to emphasize that the AU is still exposed as a barometer of the commercial dispute between the US and China, pointing out that, although the RBA is likely to loosen the policy next month, the main engine for the Aud remains the developments in commerce and raw materials. On the internal level, the Australian economy faces pressure due to global decoupling, and the expected reduction of RBA rates in May could limit the bullish potential.
Daily summary of market movements: the price of gold shoots while the US dollar falls
- The gold reached a new record about $ 3,319 per ounce, supported by the demand for safe refuge and lower yields of the treasure bonds.
- Trump ordered investigation into possible tariffs on all imports of critical minerals, citing national security concerns.
- China responded with new export licenses for rare earths, increasing economic pressure on key US sectors.
- The GDP of the first quarter in China surprised up with 5.4% year -on -year; March activity indicators also exceeded forecasts.
- Chinese officials indicated their willingness to resume commercial conversations if the US adopts a more respectful tone.
- The Australian dollar remains linked to the tensions between the US and China, limiting the bullish potential despite a strong appetite for risk.
- RBA is expected to reduce fees in May, but the status of Proxy of China makes the Aud vulnerable to winds against external.
- The DXY is negotiated defensively near the 99.70 area, without significantly benefiting from the US optimistic data.
Technical Analysis: The AUD/USD maintains bullish bias
The Aud/USD shows a bullish technical perspective after rising to the 0.64 region. The indicator of convergence and divergence of mobile socks (MACD) is generating a new purchase signal, while the relative force index (RSI) is located about 59, in neutral-positive territory. Supporting the bullish inclination there are several key mobile socks: the EMA of 10 days at 0.6264, the 10 -day SMA at 0.6202, the 20 -day SMA at 0.6244 and the 100 -day SMA at 0.6289, all pointing up. Only the 200 -day SMA in the longer term, positioned at 0.6480, remains inclined down, suggesting that some resistance can persist above the curve.
Despite some contradictory signals of the raw material channel index and the stochastic oscillator – both showing neutral readings – the general structure favors an upward continuation if the impulse is maintained. The immediate support is about 0.6325 and 0.6288, while the resistance can be seen at 0.6412, followed by 0.6479.
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.
