After lower Chinese demand, the AUDUSD remains resilient.
The AUDUSD pair is seeking to retake the round-level resistance of 0.6800. Despite a minor recovery in the US Dollar Index (DXY), the Australian currency is projected to continue its upward trend. The USD Index has seen some buying interest from investors below 103.30. But additional decline appears likely as the Federal Reserve (Fed) pursues a neutral interest rate policy.
Despite weakening Chinese demand, the Australian Dollar is holding up well. Lower interest rates from the People’s Bank of China (BoC). And supporting fiscal policies are failing to re-establish overall growth. China’s manufacturing deflation indicates a gloomy domestic demand, with no signs of recovery visible.
It is worth noting that Australia is China’s largest trading partner, and bad economic prospects. In China have an impact on the Australian Dollar.
Investors are becoming cautious ahead of the release of US CPI data, although the general market attitude remains upbeat.
S&P500 futures have reduced some of the gains made in London, indicating a slight correction. Market participants’ risk appetite has decreased. Investors are becoming cautious ahead of the release of the United States Consumer Price Index (CPI) data on Tuesday, but overall market mood remains optimistic.
The USD Index is projected to continue exceptionally volatile as traders debate the Fed’s policy guidance. One school of thought says that the Fed should refrain from raising rates this time because labor market conditions have begun to improve, US factory activity has been shrinking for seven months in a row, and the service sector is simply expanding.
Another argument is that more rate hikes are needed since inflation in the US economy is more than double what is desired. Meanwhile, there will be a resumption of The Reserve Bank of Australia (RBA) and the Bank of Canada (BoC) raising interest rates suggests that the fight against stubborn inflation is far from done. This could provide more motivation for Fed policymakers to tighten policy further.
