- AUD/USD bulls hold the baton after flashing the biggest daily gains since March 2017.
- Broad US dollar weakness, risk-on sentiment favored the Aussie dollar.
- US President Donald Trump’s refrain from punishing China, civil unrest in America acted as the main catalysts.
- RBA is widely anticipated to keep the current monetary policy unchanged.
Having dominated the markets at the week’s start, AUD/USD bulls keep the reins around 0.6810, high of 0.6814, at the beginning of Tuesday’s Asian session. The Aussie pair extends the previous day’s gains amid broad US dollar weakness and the market’s optimism amid US President Donald Trump’s no fresh sanctions on China during Friday’s conference. Riots in the US and downbeat US data are an additional burden on the greenback. Moving on, monetary policy meeting by the Reserve Bank of Australia (RBA) acts as the key catalysts in Asia.
Did Trump trigger optimism or is it weak USD?
There are varied concerns upon whether the recent surge of the AUD/USD pair is backed by the US President Donald Trump’s absence of punitive action of the weak US dollar performance. If we observe Friday’s China conference by the Republican leader, worrisome comments couldn’t be ignored and there were hidden threats used. Hence, the US leader hasn’t forgiven China for its rush to power in Hong Kong.
On the other hand, the US dollar weakness could be a more suited reason for the Aussie pair’s run-up. In addition to the US-China story, hopes of economic restart and expectations of the further stimulus also propelled the market’s risk-tone sentiment, which in turn weighed on the USD’s safe-haven demand. Additionally, soft ISM Manufacturing PMI, 43.1 versus 43.6 forecast, also exerted downside pressure on the US currency.
Amid all these catalysts, the US 10-year Treasury yields gained 2.3 basis points (bps) to 0.667% whereas Wall Street benchmarked flashed mild green signs by the end of their trading on Monday.
While the civil unrest in the US is getting worse, with New York recently announcing curfew, coupled with no major catalysts concerning America, the USD is more likely to remain on the back foot. However, major attention will be given to today’s RBA meeting for near-term AUD/USD moves. Even if the Aussie central bank isn’t expected to alter the monetary policy, not to mention the key interest rate, Governor Philip Lowe recently sounded upbeat and raised hopes of a positive statement. As a result, the Aussie pair may extend its run-up following the event.
Read: RBA Preview: Not enough to kick-start anything in AUD/USD at make-or-break levels
Ahead of the RBA, the first quarter (Q1) Aussie Current Account Balance and Company Gross Operating Profits will offer intermediate clues to the markets.
Technical analysis
While overbought RSI keeps questioning the buyers, the early-January lows near 0.6850 are likely nearby resistance during the further upside. It should also be noted that the sellers are less likely to return to the desk unless witnessing a downside break of a 12-day-old support line around 0.6620.
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 drops below 1.0800 after German Retail Sales data
EUR/USD has come under fresh selling pressure and trades below 1.0800 after the data from Germany showed that Retail Sales declined by 1.9% MoM in February. Resurgent US Dollar demand is adding to the downside in the pair. US data are next in focus.
GBP/USD stays weak near 1.2600 amid market caution
GBP/USD remains defensive near 1.2600 in European trading on Thursday. The hawkish tone from Fed Governor Christopher Waller keeps the US Dollar afloat amid a cautious trading environment ahead of key US data releases and the Good Friday trading lull.
Gold price holds strength ahead of US core PCE inflation
Gold price holds onto gains near $2,200 in Thursday’s European session. The precious metal exhibits firm footing ahead of the United States core PCE Price Index data for February, which will be published on Friday.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.