The Australian Dollar (AUD) experienced a rise as the Aussie Trade Surplus widened in May. The Australian Bureau of Statistics reported a Trade Balance figure of 6,548 million month-over-month in May, surpassing the expected 5,500 million. This positive data contributed to the strengthening of the AUD/USD pair, which saw the Australian Dollar appreciating against the US Dollar. Alongside the Trade Balance release, a hawkish statement by Reserve Bank of Australia (RBA) Governor Michele Bullock further supported the Australian Dollar, indicating a possibility of interest rate hikes if the Consumer Price Index (CPI) does not return to the target range of 1%-3%.
On the other hand, the US Dollar (USD) struggled due to mixed economic data releases in the United States. The ISM US Services PMI soared to 53.8 in May, surpassing expectations and marking its highest level in nine months. However, the ADP US Employment Change report showed a lower than expected addition of 152,000 new workers to payrolls in May. This mixed data fueled speculation of a rate cut by the US Federal Reserve (Fed), causing the US Dollar to depreciate. The probability of a Fed rate cut by at least 25 basis points has increased to nearly 70.0%, up from 47.5% a week earlier.
In terms of technical analysis, the Australian Dollar remains above 0.6650 against the US Dollar. The daily chart shows a bullish bias for the AUD/USD pair within a rising wedge pattern, with the 14-day Relative Strength Index (RSI) above the 50 level. Potential upside targets include the psychological level of 0.6700, the four-month high of 0.6714, and the upper limit of the rising wedge around 0.6750. Immediate support is at the 21-day Exponential Moving Average (EMA) at 0.6634, with additional support at the psychological level of 0.6600.
Looking ahead, investors are awaiting key US employment data releases, including Average Hourly Earnings and Nonfarm Payrolls, which could further impact the performance of the US Dollar. Additionally, changes in the Chinese economy, as highlighted by the Caixin China Services PMI, could affect the Australian market due to the close trade partnership between the two countries. Overall, factors such as interest rates set by the RBA, the health of the Chinese economy, Iron Ore prices, inflation in Australia, growth rate, and Trade Balance all play a significant role in influencing the value of the Australian Dollar.