- RBA says it will purchase more bonds if necessary.
- Aussie dollar faces more pressure from the escalating China-U.S trade war.
- Lowe cites monetary policy limits
The AUD/USD’s latest performance indicates weak bearish momentum but analysts are on the lookout for more downside as trade tensions escalate between China and the U.S. the trade war tensions have been weighing heavily on the Australian dollar because China is Australia’ biggest trade partner, thus the sensitivity. Meanwhile, the Reserve Bank of Australia recently stated that it is ready to increase its bond purchases, a move that it has avoided for the past 9-days. Doing so would add more bearish pressure to the Aussie dollar.
The AUD/USD exchange is expected to hit the $0.6607, $0.6623, $0.6662, and $0.6703 price targets if the price goes long above $0.6587. It is also expected to test the $0.6527, $0.6503, $0.6472, and $0.6423 price levels if it goes short below $0.6547. However, the exchange rate’s performance on Thursday morning indicates weak bearish performance. This is because investors are currently cautious about the AUD due to the RBA’s plan for more bond purchases and the trade war situation.
The AUD/USD outlook is looking rather bearish because the Aussie dollar is currently in a position where it might have to bow to the pressure from the RBA’s dovish statements. The trade war between China adds to the potential downside, and there are also the fears of a second wave of coronavirus infections, which might add to the AUD’s woes.
The RBA hopes that monetary policy measures will help protect capital and ensure there is still liquidity in the market. If the Australian central bank can manage to continue balancing on the tight rope that the economy is currently on before things get better, then that would provide a buffer for the Aussie dollar.
Flash manufacturing PMI data released on Thursday morning came in at 42.8, lower than the previous 44.1. The flash services PMI data was reported at 25.5, which was higher than the previous 19.5. This data is not expected to have a major impact on the AUD/USD exchange rate during the session.