- AUD/USD starts the week with a bullish gap on trade headlines.
- President Trump and Chinese President Xi agreed to a 90-day trade truce on Saturday.
- Coming up: The RBA's rate decision and monetary policy statement.
The AUD, which suffered heavy losses on rising trade war concerns in the last couple of months due to Australi's economic ties to China, rebounded strongly on Monday after the U.S. President Trump and Chinese President Xi agreed to a 90-day ceasefire following their meeting at the G20 summit in Buenos Aires. After starting the week with a 60-pip bullish gap, the AUD/USD pair touched its highest level since early August at 0.7393 before going into a consolidation phase in the NA session. As of writing, the pair was trading at 0.7353, adding 0.65% on a daily basis.
With the greenback struggling to find demand in the risk-on environment, the US Dollar Index fell to 96.70 earlier in the day to give an extra boost to the pair. Despite mixed PMI data reading from the U.S., however, the index recovered to the 97 area in the second half of the day and has been moving sideways near that level since.
- US: Markit Manufacturing PMI falls to 55.3 vs 55.4 expected.
- US: ISM Manufacturing PMI rises to 59.3 vs 57.5 expected.
During the Asian trading hours on Tuesday, the RBA is going to announce its interest rate decision and publish the monetary policy statement. Although markets expect the bank to keep the policy rate unchanged at 1.5%, investors will be paying a close attention to the tone the bank adapts in its publication.
Previewing the event, "Since the RBA's November statement the housing-related data has been weak. Wages have been in line with expectations. And employment and forward expectations for capex have been solid. Global news has been negative, including wider credit spreads and lower oil prices. Together these won't be enough to shift the RBA from its positive outlook, but may see some caution enter the Bank's commentary,” argued ANZ analysts.
Technical levels to consider
The initial support for the pair aligns at 0.7345 (200-DMA) ahead of 0.7270 (20-DMA) and 0.7200 (psychological level/100-DMA). On the upside, resistances could be seen at 0.7390 (daily high), 0.7450 (Aug. 9 high) and 0.7500 (psychological level).
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 clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.