- The AUD/USD begins the week on the right foot, gaining 0.25%.
- An upbeat market mood due to China’s covid news and the US weighing lifting restrictions on China’s increased appetite for riskier assets.
- Fed speakers reiterated the US central bank’s commitment to tackle inflation down.
The Australian dollar edges up in the North American session, even though a bank holiday in the US kept trading conditions thin due to a lack of volume in the FX markets. At 0.6952, the AUD/USD bounces off daily lows at 0.6915 after reaching a daily high near 0.7000.
Risk-on impulse boosts the AUD
In an upbeat mood, US equity futures closed earlier due to a holiday. That, alongside China’s Covid-19 crisis getting under control and US President Biden weighing removing some trading tariffs to China, was cheered by investors, as shown by climbing AUD/USD prices.
Nevertheless, despite the AUD/USD jump near the 0.7000 area, falling Iron Ore prices capped the rally. Newswires over the weekend reported that China wants to set up a central group to control Iron Ore imports by the end of the year. If that’s achieved, AUD/USD traders should be aware that some of Australia’s 697 million tonnes of exports would take a hit, and with it, the Aussie dollar.
Elsewhere, Fed speakers commenced crossing wires. Throughout the weekend, Fed member Christopher Waller backed a July 75 bps rate hike mentioning that inflation needs to be brought down, regardless of the cause. Meanwhile, Cleveland’s Fed President Loretta Mester noted that inflation would not reach the Fed’s 2% target while mentioning that although the Fed’s Summary of Economic Projections (SEP) foresees the US economy slowing down, she said that she’s not “predicting a recession.”
On Tuesday, the Australian economic calendar will feature the Reserve Bank of Australia (RBA) Governor Philip Lowe speaking. The central bank will also release minutes of its June meeting, at which it decided to hike by a surprisingly large 50 basis points to 0.85%, and markets are wagering on a similar-sized move for July as well.
The US economic docket will feature Existing Home Sales for May, and further Fed speakers, with Richmond Fed President Thomas Barkin, crossing wires
Key Technical Levels
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 treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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.