AUDUSD pair draws some dip-buying and maintains its gains.
After an overnight decline from a multi-day high, the AUDUSD pair draws some dip-buying and maintains its gains. During the Asian session on Wednesday. Spot prices are now trading in the mid-0.6400s, up little more than 0.40% on the day. And aim to build on the recent rebound from the lowest level since November 2022. Which was reached last Thursday despite a modestly softer tone around the US Dollar (USD).
In reality, the USD Index (DXY). Which measures the value of the US dollar against a basket of currencies, is losing ground. the previous day’s gains to a more than two-month high. And is being weighed down by falling US Treasury bond rates. Aside from that, a generally optimistic tone in US market futures encourages some profit-taking in the safe-haven buck. Which favors the risk-sensitive Australian Dollar (AUDUSD). Amid expectations for greater Chinese stimulus, hints of reducing US-China trade tensions lead to a minor improvement in global risk sentiment.
China’s economic troubles, along with aggressive Fed predictions, may limit the pair’s future advances.
The US Commerce Department’s Bureau of Industry and Security (BIS) stated on Monday that it will remove 27 Chinese firms from its Unverified List. China praised the action, saying it promotes normal commerce between the two countries. This comes before US Secretary of StateGina Raimondo, Secretary of Commerce, will visit China from August 27 to 30, for discussions with senior Chinese officials and US business executives. However, fears over a Chinese economic slowdown kept the optimism and the China-proxy Aussie in check.
Despite a widening crisis in the domestic property sector, a lesser rate drop by the People’s Bank of China (PBoC) signaled little policy support for the economy and did nothing to alleviate concerns about worsening economic conditions. This, along with worse Australian PMI readings, may deter traders from initiating strong bullish wagers on the AUDUSD pair.
According to the most recent Judo Bank survey, Australia’s manufacturing sector continued to drop in August, while services activity contracted at the quickest rate in 19 months. Furthermore, increased confidence that the Federal Reserve (Fed) would maintain its hawkish posture and keep interest rates higher for longer favors USD bulls, potentially contributing to a further limit on the AUDUSD pair.
AUDUSD intraday rise appears untouched by August’s lackluster Australian PMIs.
AUDUSD players are now anticipating the publication of flash US PMIs later in the early North American session for a new impetus. However, the attention will remain on the Jackson Hole Symposium, where statements by Fed Chair Jerome Powell might give clues about the future rate rise path and fuel USD demand in the short term.
