The Australian Dollar (AUD) saw gains on Tuesday amidst improved risk appetite, with Australia’s Consumer Confidence falling by 0.3% month-over-month in May, marking the third consecutive month of decline. The RBA Meeting Minutes revealed challenges in determining future changes in the cash rate, while higher US Treasury yields supported the US Dollar.
China’s announcement of measures to support its struggling property market, along with the relaxation of mortgage rules and encouragement for local governments to purchase unsold homes, could boost sentiment in Aussie markets as both nations are close trade partners. The US Dollar remained steady due to the absence of top-tier economic data releases from the US, with support from higher US Treasury yields.
Minutes from the RBA meeting in May 2024 showed considerations about raising rates, but ultimately opting for a steady policy. ASX 200 experienced declines to around 7,850, driven by mixed performances on Wall Street. Mining giants saw an uptick due to Beijing’s measures, while Federal Reserve Board members expressed views on inflation progress and rate cuts.
Technical analysis showed the Australian Dollar could test the psychological level of 0.6700, with the AUD/USD pair potentially exploring further highs. The daily chart indicated an ascending triangle formation, with the 14-day RSI suggesting a bullish sentiment. The AUD/USD pair could test the upper limit of the ascending triangle near the four-month peak of 0.6714.
The table displayed percentage changes of the Australian Dollar against major currencies, with the AUD strongest against the Swiss Franc. Factors affecting the Australian Dollar include interest rates set by the RBA, the health of the Chinese economy, Iron Ore prices, and the Trade Balance. The RBA influences the AUD through interest rate adjustments, while the Chinese economy’s performance impacts the demand for Australian exports.
Iron Ore prices, as Australia’s largest export, can drive the Australian Dollar’s value. Positive or negative surprises in Chinese growth data directly impact the AUD. The Trade Balance, reflecting the difference between exports and imports, can also influence the value of the Australian Dollar. A positive net Trade Balance strengthens the AUD, while a negative balance weakens it.
