- Australia Economy Re-opening
- Australia Economy Contraction
- S-China Trade Talks
The Australian dollar resurgence from one month low against the U.S dollar continues to gather steam. The bid tone around AUD comes hot on the heels of the reopening of the Australian economy after weeks of shutdowns, which appears to have taken a toll on economic activity. Likewise, the easing of tension between the US and China in the wake of the COVID-19 fallout also continues to offer support to the AUD.
Economic reopening, coupled with renewed U.S China Trade optimism, has kept the tone on AUD/USD bullish. The pair has since risen to highs of 0.6544 with bulls looking to test highs of 0.66 handle before the weekend.
Time : 08-05-2020
Pivot : 0.6497
Technical View : Long Above 0.6517
Target : 0.6500 next 3 targets are 0.6537, 0.6599 and 0.6641
Comments : Weak bullish
Last Price : 0.6521
The AUD USD pair could rise to two months high of 0.6539 should the risk-on environment persist. The greenback, on the other hand, looks set to remain on the defensive as the interest rate market continues to price in the possibility of a negative interest rate from the U.S Federal Reserve.
The bullish tone on the AUD/USD comes even on the Reserve Bank of Australia warning that the economy is on course to contract by 6% in 2020. However, the policymakers expect the economy to rebound in 2021 and grow at an impressive 6%. The jobless rate is also expected to surge to 10% by June, with output in the economy expected to drop by 10%, capping a dismal second quarter.
Traders in the forex market continue to shrug off the poor economic data, something that continues to offer support to the Australian Dollar. Traders are increasingly buying into risk, conversely pushing the AUD higher against a basket of other major currencies.
A confirmation that U.S and Chinese diplomats are poised to commence trade talks next week also continues to fuel the bid tone around AUD. China is Australia’s biggest trading partner, of which a spike in economic activity in China many at times tends to have a similar impact on the Australian economy.
The non-Farm Payroll is another crucial report that could have a say on the direction AUD/USD will trade heading into the weekend. The dollar has so far remained resilient to weak economic data as traders bet on it, given its safe-haven credentials.