AUDUSD gets modest buying, but further gains appear difficult.
The AUDUSD pair gets some positive impetus during the Asian session on Friday. And appears to have broken a two-day losing skid to sub-0.6600 levels, or a one-week low reached the day before. Spot prices are now trading at 0.6630, up little more than 0.10%. On the day, however any major appreciation remains elusive.
China’s economic troubles, along with deteriorating US-China relations, might bring the Australian dollar to a halt.
China has recently revealed a barrage of dismal economic data. Worries over declining growth in the world’s second-largest economy have grown. Furthermore, the possibility of escalation in the US-China trade war continues to weigh on investors’ mood. As seen by a generally negative tone in equities markets. And might serve as a headwind for the risk-sensitive Australian dollar. The US Dollar (USD), on the other hand. Draws some buying on the last day of the week halting its retracement decline from the highest level since June 12 reached on Thursday, which may help further to limiting the AUDUSD pair.
Bets on additional Fed rate rises strengthen the USD while prudence is advised for bulls.
Expectations that the Federal Reserve (Fed) would raise interest rates by 25 basis points (bps) at its next policy meeting on July 25-26 prove to be a crucial influence. offering some assistance to the USD. The bullish US ADP data issued on Thursday confirmed the expectations, showing that private-sector companies gained 497K jobs in June, well above the 267K in the previous month and the most optimistic estimates. The US ISM Services PMI jumped to 53.9 in June from 50.3 the previous month, indicating sustained economic improvement, even as the Prices Paid sub-component – an indicator of inflation – plummeted to more than three-year lows.
Nonetheless, the statistics indicated a strong US economy, which supports the Fed’s chances for future policy tightening. As a result, rising US Treasury bond rates remain encouraging, as do chances for additional USD appreciation in the short term. Traders, on the other hand, appear hesitant to put aggressive bets and prefer to sit on the sidelines ahead of the publication of the closely-watched US monthly employment figures, widely known as the NFP report, which is coming later in the early North American session.
