AUD/USD stays firm near 0.6650 on upbeat China’s Trade Balance data, RBA policy eyed

AUD/USD extends winning spree as the RBI is likely to convey caution on further interest rate cuts.
China’s trade surplus grew at a faster-than-expected pace in November amid strong export numbers.
The Fed is expected to cut interest rates by 25 bps on Wednesday.

Sagar Dua FXStreet

The AUD/USD pair extends its winning streak for the 12th trading day on Monday. The Aussie pair trades firmly to near its over two-month high of 0.6650 during the late Asian session, posted on Friday.

Australian Dollar Price This Month

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this month. Australian Dollar was the strongest against the US Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.62%	-0.80%	-0.64%	-1.16%	-1.52%	-1.00%	-0.08%
EUR	0.62%		-0.18%	-0.04%	-0.54%	-0.91%	-0.38%	0.55%
GBP	0.80%	0.18%		0.41%	-0.36%	-0.73%	-0.21%	0.73%
JPY	0.64%	0.04%	-0.41%		-0.53%	-0.91%	-0.38%	0.55%
CAD	1.16%	0.54%	0.36%	0.53%		-0.43%	0.16%	1.09%
AUD	1.52%	0.91%	0.73%	0.91%	0.43%		0.53%	1.47%
NZD	1.00%	0.38%	0.21%	0.38%	-0.16%	-0.53%		0.94%
CHF	0.08%	-0.55%	-0.73%	-0.55%	-1.09%	-1.47%	-0.94%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

The Australia Dollar (AUD) has been demonstrating strength from past few weeks as market participants expect the Reserve Bank of Australia (RBA) to convey, in its monetary policy announcement on Tuesday, that it is done with reducing interest rates.

Traders pare RBA dovish expectations, and expect it tighten monetary conditions in the near term as price pressures are proving to be persistent. In the third quarter of the year, inflation in Australia rose at a faster pace of 3.2% on an annualized basis against 2.1% growth seen in the second quarter this year.

Meanwhile, China’s Trade Balance data for November has come in stronger-than-projected due to upbeat export numbers. National Bureau of Statistics of China reported that the trade surplus widened to $111.68 billion from $90.07 billion in October, while it was expected to increase at a moderate pace to versus $100.2 billion. Exports from China rose strongly by 5.7% in Chinese Yuan (CNY) terms after declining 0.8% in October.

Given that the Australian economy relies heavily on its exports to Beijing, China’s upbeat Trade Balance data offers support to the Australian Dollar.

In the United States (US), investors await the Federal Reserve’s (Fed) monetary policy announcement on Wednesday. The Fed is expected to cut interest rates by 25 basis points (bps) to 3.50%-3.75% due to worsening job market conditions. At the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades with caution near its five-week low of 98.75 posted on Thursday.

Economic Indicator

RBA Interest Rate Decision

The Reserve Bank of Australia (RBA) announces its interest rate decision at the end of its eight scheduled meetings per year. If the RBA is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Australian Dollar (AUD). Likewise, if the RBA has a dovish view on the Australian economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for AUD.

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