The AUD/USD pair is observed to be in a weakened state, with it fluctuating around 0.6720 in the early Asian trading session of Thursday. This can be linked back to the US job market data, which demonstrates a gradual slowdown and as a result weakens the USD. Conversely, the Australian Dollar seems to be starting to gain some traction but is still impacted by continuous economic issues. This is largely down to the continuous trade disputes between the US and China.
These tensions between the two largest world economies is especially felt in the Australian economy, which is heavily reliant on exports. Despite this, the AUD maintains resilience and manages to stay above the 0.6700 mark against the weakening USD.
The release of the Federal Reserve’s meeting minutes has also reportedly influenced the AUD. Whilst no concrete decisions were made, there are speculations of a possible reduction in interest rates which could further devalue the USD. However, the Reserve Bank of Australia (RBA) is known for maintaining low interest rates; a dip in the US wouldn’t significantly impact the AUD/USD relationship.
Market participants are now eagerly waiting for the release of US Retail Sales data. Changes resulting from this could solidify or balance the AUD/USD dynamic. As we progress, this pair must be monitored closely along with global economic trends and new data releases. While forex trading is notorious for unexpected turns, some optimism is projected
Attention is now shifting towards an upcoming speech from a RBA representative, along with the release of the US ISM Services PMI. These are expected to shed light on the financial health of both countries.
AUD/USD wrestles with US job market woes
Market participants will carefully analyse the tone of the RBA representative’s remarks and the numerical data of the US ISM Services PMI. Any surprising figure or hawkish tilt could stir market volatility and sway market sentiment.
Worries over the state of the Chinese economy and a potential 50 basis point rate reduction by the Federal Reserve in September have amplified the sluggishness of the AUD/USD pair around the 0.6720 point. Reduced risk appetite among investors due to these concerns have negatively impacted the AUD due to its correlation with global economic health. However, experts believe a significant rate cut from the Federal Reserve may bolster the AUD as this could lead to a weaker USD, making the AUD more valuable in comparison.
Australian GDP growth for Q2 was only 0.2%, marking the poorest performance not including the first year of the COVID-19 pandemic. Still, experts are optimistic about a rebound for the upcoming quarters amidst the rollout of vaccination programs and the easing of nationwide restrictions. Meanwhile, necessary policy support and stimulus measures by the government are anticipated due to prolonged economic uncertainty.
While a weakened Chinese economy puts pressure on the AUD, an increase in Chinese Manufacturing PMI in August could impact the AUD positively in the future given the existing strong trade relationship. The ongoing Covid-19 pandemic and fluctuations in US-China trade relations also influence the AUD value. It’s crucial to keep track of these economic indicators to predict future trends.
Various factors can impact the AUD’s value such as RBA’s interest rates, the price of Australia’s main export (Iron Ore), Australian inflation, its growth rate, Trade Balance, and even overall market sentiment. A thriving Chinese economy, being a vital trading partner, could also help improve the AUD’s value.
Buyer perception is another significant factor that can greatly influence the AUD’s value. Positive market sentiment increases demand for AUD whereas negative sentiment can trigger a fall. It’s crucial for traders to stay abreast with these market trends and financial indicators.
