- AUD/USD seesaws around the highest since December 2018.
- US Dollar weakness joins upbeat equities and commodities to favor the Aussie bulls.
- Sino-American tussle gets a fewer audience and so does virus updates, US policymakers still jostling over the stimulus package.
- China’s NBS Manufacturing PMI may drop to the lowest in six months, second-tier Aussie data also up for release.
AUD/USD is up for the fifth consecutive monthly gains while taking rounds to 0.7365 at the start of Monday’s Australian session. The pair surged to the December 2018 top on Friday after the US dollar trimmed the Fed-backed gains of the previous day. Also favoring the bulls were the strong performances of stocks and commodities, especially gold. Traders may now wait for China’s key activity numbers for fresh impulse.
Bulls keep the reins…
With the US dollar’s heavy losses dragging it back to the 27-month low, the AUD/USD prices marked a stellar run-up towards piercing the previous year’s peak. Market’s reassessment of Fed Chair’s Average Inflation Targeting (AIT) method, allowing inflation to go high past-2.0% target, joined downbeat Core PCE data to weigh on the greenback. In doing so, welcome numbers of the US Consumer Sentiment and Chicago Fed Manufacturing Index were mostly ignored.
Also pleasing the quote bulls were the north run by global equities and commodity prices. While S&P 500 refreshed the record high, gold also regained $1,965. Furthermore, the US 10-year Treasury eased 2.2 basis points (bps) to 0.72% by the end of Friday’s trading.
The coronavirus (COVID-19) numbers remained mostly static with the US, Brazil and India occupying the top spots. Recently, an American health official Dr.Fauci rekindled expectations of the early vaccine. Previously, US President Donald Trump has pushed for the pandemic’s cure.
Elsewhere, the US and China keep disliking each other with American President Trump’s latest comments suggesting an end to reliance on China.
While there have not been any key bullish fundamentals from home, the pair traders may look forward to China’s PMI data for August for fresh direction. Also in the line is Australia’s TD Securities Inflation for the current month. Forecasts suggest the key NBC Manufacturing PMI drop to 48.7 versus 51.1 whereas the Non-Manufacturing PMI may weaken to 52.1 from 54.2 prior. The manufacturing activity figures, if matching the forecasts, will mark its first contraction since February and can trigger the pair’s fresh downside.
Technical analysis
With the RSI flashing overbought signals, an ascending trend line from March 2020 and December 2018 top near 0.7400 becomes the key resistance to watch for the bulls ahead of targeting July 2018 peak surrounding 0.7485. Alternatively, the pair’s declines below the previous year’s high of 0.7296 will highlight August 19 peak near 0.7275 as support.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stabilizes near 1.0400, volumes remain light on New Year's Eve
EUR/USD stabilizes at around 1.0400 on Tuesday following Monday's choppy action. The cautious market stance helps the US Dollar stay resilient against its rivals and doesn't allow the pair to gain traction as trading conditions remain thin heading into the end of the year.
GBP/USD retreats below 1.2550 after short-lasting recovery attempt
GBP/USD loses its traction and retreats below 1.2550 after climbing above 1.2600 on Monday. Although falling US Treasury bond yields weighed on the USD at the beginning of the week, the risk-averse market atmosphere supported the currency, capping the pair's upside.
Gold rebounds after finding support near $2,600
After posting losses for two consecutive days, Gold found support near $2,600 and staged a rebound early Tuesday. As investors refrain from taking large positions ahead of the New Year Day holiday, XAU/USD clings to daily gains at around $2,620.
These three narratives could fuel crypto in 2025, experts say
Crypto market experienced higher adoption and inflow of institutional capital in 2024. Experts predict the trends to look forward to in 2025, as the market matures and the Bitcoin bull run continues.
Three Fundamentals: Year-end flows, Jobless Claims and ISM Manufacturing PMI stand out Premium
Money managers may adjust their portfolios ahead of the year-end. Weekly US Jobless Claims serve as the first meaningful release in 2025. The ISM Manufacturing PMI provides an initial indication ahead of Nonfarm Payrolls.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.