AUDUSD pair regains positive momentum and advances to the 0.6430 level.

On the opening day of a new week, the AUDUSD pair regains positive momentum. And advances to the 0.6430 level during the Asian session, halting a two-day losing skid.

China’s new policies, along with positive domestic statistics, are driving flows to the AUDUSD.

China said on Sunday that the stock trading fee will be reduced from 0.1% to 0.05% beginning August 28 – the first cut since 2008. The new measures are intended tobolstering the faltering market and recovering investor confidence. Which boosts the China-proxy Australian Dollar (AUDUSD), which also benefits from better-than-expected domestic statistics.

Indeed, the Australian Bureau of Statistics (ABS) announced that Retail Sales. A gauge of the country’s consumer spending, grew 0.5% in July, compared to consensus projections of a 0.3% increase and a 0.8% fall the prior month. This, along with a little decline in the US Dollar (USD), offers a goodish bounce to the AUDUSD pair. Albeit any major appreciation appears elusive.

Concerns about China’s deteriorating economic situation and potential recession concerns should keep market optimism in check. Aside from that, the Federal Reserve (Fed) is expected to tighten policy further. Should restrict the USD’s corrective drop from its highest level since early June. Which was reached on Friday, and help to limit gains for the AUDUSD pair, at least for the time being.

Bets on another Fed rate rise in 2023 should limit USD losses and cap large gains.

It’s worth noting that markets have been pricing in another 25 basis point rate rise by the end of this year. Fed Chair Jerome Powell’s statements on Friday reiterated the need to hike interest rates further to calm still-too-high inflation. Powell went on to say that officials will tread carefully. As they determine whether to tighten more or maintain rates steady.

This hawkish stance supports rising US Treasury bond rates and favors USD bulls. Therefore be cautious before putting strong bullish wagers on the AUDUSD. . As a result, it is wise to wait for substantial follow-through purchasing to establish that spot prices have bottomed out at 0.6365, or the lowest level since November 2022, which was set earlier this month.