The Australian dollar has started the week in positive territory. AUDUSD is trading at 0.6596 in the European session, up 0.41% on the day at the time of writing.
Australian Dollar recovers as markets stabilize
The Australian dollar has quickly recovered from the recent turbulence which routed global stock markets. Last Monday, the Australian dollar fell as much as 2.4% but managed to pare most of the losses. As the markets have steadied, the risk-prone Aussie has improved by 1.5%. Still, there is uneasiness in the markets and if sentiment sinks, the Australian dollar could head lower.
On Tuesday Australia releases the wage price index for the second quarter. The market estimate stands at 0.9% q/q, compared to 0.8% in the first quarter. Annually, wage growth is expected to tick lower to 4.0%, compared to 4.1% in Q1. The RBA will monitoring the data carefully, as it remains concerned about a price-wage spiral.
The Reserve Bank of Australia held rates last week at 4.35% but remained hawkish, with Governor Bullock saying that she didn’t expect a rate cut for the next six months. Bullock said that policy makers had discussed a rate hike due to concerns of “persistently high inflation”.
The RBA could become an outlier among other central banks, which have already lowered rates or like the Federal Reserve, have signaled that rate cuts are coming soon. The message that rates could go higher has boosted the Australian dollar but there would be a cost as homeowners and businesses are straining under the weight of high interest rates. If inflation does rise more than expected, we are likely to see the RBA continue to hold rates for the next several months. The markets are more dovish and have widely priced in a rate cut in December.
AUD/USD technical
-
There is resistance at 0.6668 and 0.6765.
-
0.6509 and 0.6412 are the next support levels.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD recovers toward 1.0400 as USD rally loses steam
EUR/USD recovers from daily lows toward 1.0400 in the American session on Tuesday. Following the earlier rally, the USD struggles to preserve its strength as the bullish opening in Wall Street's main indexes point to an improving risk mood.
GBP/USD stays below 1.2300 after UK employment data
GBP/USD rebounds from session lows but remains below 1.2300 in the second half of the day on Tuesday. The US Dollar clings to modest gains but finds it difficult to gather further bullish momentum as the impact of Trump's tariff threats fade.
Gold now targets the all-time high near $2,800
Gold gathers bullish momentum and trades at its highest level since early November above $2,730 on Tuesday. The benchmark 10-year US Treasury bond yield is down more than 1% below 4.6% following US President Trump's tariff threats, helping XAU/USD push higher.
Bitcoin fails to sustain the $109K mark after Trump’s inauguration
Bitcoin’s price steadies above the $102,000 mark on Tuesday after reaching a new all-time high of $109,588 the previous day. Santiment’s data shows that BTC prices quickly corrected, as social media showed major greed and FOMO among the traders in Bitcoin after President Donald Trump’s inauguration.
Prepare for huge US trade changes as Trump goes America first
You can be sure that big changes are coming as far as US trade is concerned, even if we didn't get any new tariffs on President Trump's first day in office. A comprehensive investigation into US trade relationships was initiated via a memorandum. China, Canada, and Mexico are clearly in the immediate firing line.
Trusted Broker Reviews for Smarter Trading
VERIFIED Discover in-depth reviews of reliable brokers. Compare features like spreads, leverage, and platforms. Find the perfect fit for your trading style, from CFDs to Forex pairs like EUR/USD and Gold.