On Monday, the Australian dollar continued its losing streak. The decline of the US dollar has helped keep the AUD/USD pair below its three-month high of 0.6590. The mixed S&P Global PMI data has impacted negative sentiment, which has led to the Aussie pair strengthening.
The Australian dollar rose in value due to rising market optimism and stimulus in the Chinese housing market. The better mood of investors has led to well-performing equity markets. The People’s Bank of China (PBoC) has announced financial assistance for private businesses. Listing, financing, mergers, acquisitions, and restructuring are all areas where private enterprises receive assistance.
The Australian dollar has dropped from 9.0% to 7.8% following the release of China’s Industrial Profit Year-to-Date (YTD) statistics. Industrial enterprise profits recovered 2.7% in October after falling 11.9% in September.
PBoC vigorously urged lenders to refrain from cutting or terminating loans for private enterprises facing temporary hardships but possessing competitive technology, and the central bank also pledged to increase the issue of private business bonds.
The recent hawkish comments of RBA Governor Michele Bullock have further strengthened the Australian dollar and the pound. Bullock emphasized that tightening monetary policy is best because domestic demand drives inflation.
A rise in US Treasury yields causes the DXY to decline. The US Federal Reserve (Fed) might loosen monetary policy in 2019. Nonetheless, remarks made by Fed officials last week hinted at a tightening. The importance of basing choices on facts in the fight against inflation was again emphasized.
A busy economic week is ahead for the US and Australia. Australia will most likely watch RBA Bullock’s speech, retail sales, and inflation statistics to gain monetary policy insights. Vital US statistics include the Core PCE – Price Index, ISM Manufacturing PMI, and Gross Domestic Product Annualized (Q3).
Trade Idea:
With the AUD/USD below recent highs, monitor RBA Bullock’s speech, Australian retail sales, and inflation data for potential shifts in monetary policy sentiment. Keep an eye on critical US indicators, including GDP and manufacturing PMI, amid uncertainties about the Fed’s stance, which influence the pair’s direction.