- The Aud/USD is loudly traded around the 0.6400 area while the US dollar struggles to maintain profits after weak data of business activity.
- The PMI composed of the US fell to 51.2, the services lost impulse, and Besent said that US tariffs could go down “mutually”, promoting appetite for risk.
- The technicians show a bullish bias; The support is around 0.6347 while the resistance arises at 0.6395 and above.
The Australian dollar (Aud) is listed lateralized against the US dollar (USD) on Wednesday, staying close to the 0.6400 area after a volatile session. The torque was consolidated within a narrow range of 0.6349 to 0.6436, reflecting a pause in directional conviction. This occurs after 24 turbulent hours for the US dollar, since the US dollar index (DXY) erased its initial rebound towards the 100.00 mark and settled about 99.50. The feeling of the market was affected by the comments of the Secretary of the Treasury, Scott Besent, suggesting that current tariffs with China are unsustainable and could decrease “in a mutual way.” Meanwhile, the preliminary compound PMI of Global S&P for April showed a slower growth in business activity, with the services sector losing traction.
Daily summary of market movements: markets digest new US data.
- The DXY failed to maintain profits despite touching the level of 100.00 at the beginning of Wednesday, going back to the 99.50 region at the end of the session.
- The setback occurred after the secretary of the Treasury, Besent, abstained offering a schedule for new discussions about tariffs with China and pointed out that any conversation would occur to levels below Trump and XI. He added that current tariff income would not reach to finance TCJA tax cuts, which generates tax concerns.
- The PMI Flash of Global S&P for April indicated a broader loss of impulse in the economic activity of the US compound PMI fell to 51.2 from 53.5, driven by a decrease in services to 51.4. Manufacturing improved slightly to 50.7, but the general feeling weakened. The inflationary pressures persisted, complicating the federal reserve capacity to make politics more flexible.
- Risk assets showed mixed responses. US actions fell from maximums due to uncertainty about tariffs, but then recovered some land. Meanwhile, gold fell below $ 3,300 and the 10 -year bonds of US bonds remained under pressure. Crude oil prices fell to a minimum of four days, while the silver rose to maximum of several weeks.
- In currencies, the EUR/USD and the GBP/USD retreated, weighed down by the strength of the dollar and the weak European data. The YEN weakened as the USD/JPY exceeded the level of 143.00, driven by rates expectations in the US.
Technical Analysis: The AUD/USD remains firm about 0.6400, the bulls remain in control
The Aud/USD torque shows constant yield near the level of 0.6400, with the price action ranging around the midpoint of the intra -range (0.6349 to 0.6436). Technical perspectives favor greater rise.
The relative force index (RSI) is 56.01, suggesting a neutral impulse. Meanwhile, the convergence/divergence indicator of mobile socks (MACD) confirms a bullish signal, aligning with the force of the broader trend. The stochastic %K at 89.16 and the raw material channel index (CCI) in 80.84 remain neutral.
The short -term trend indicators reinforce the upward case. The 10 -day EMA (0.6337), the 10 -day SMA (0.6347), the 20 -day SMA (0.6267) and the 100 -day SMA (0.6285) are all aligned upwards. However, the 200 -day SMA at 0.6472 continues to act as longer -term resistance.
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.
