The AUD/USD pair saw a decline on Monday after weak China trade data was released, causing the Australian Dollar to weaken. However, the pair managed to recover some of its losses and climbed into the 0.6730s after initially dropping to 0.6700 following the negative impact of the Chinese export data. China’s exports in September declined to 2.4% Year-over-Year from 8.4% previously, below the expected 6.0%. This led to a lower-than-expected Trade Balance for the month, contributing to a gloomy outlook on the Chinese economy and investor disappointment with the lack of detail in a new fiscal stimulus program.
In a speech over the weekend, Finance Minister Lan Fo’an revealed plans for a large-scale local government debt-swap program as part of the upcoming stimulus package, indicating a potential shift in China’s fiscal policy framework. The lack of concrete figures, however, left investors uncertain. The AUD/USD pair experienced a recovery during the US session on Monday, potentially due to comments made by Federal Reserve Bank of Minneapolis President Neel Kashkari. Kashkari suggested that further interest rate cuts might be necessary in the coming quarters. Lower interest rates typically have a negative impact on the US Dollar as they decrease foreign capital inflows.
Despite the potential for rate cuts, the FXStreet’s FedTracker rated Kashkari’s comments as neutral, with a score of 5.6 out of 10. This was higher than the average score of 4.3 for Fed officials, indicating a moderate tone. The expectation of further rate cuts and the neutral stance of Fed officials contributed to the AUD/USD pair’s recovery. The market will continue to monitor economic data releases and central bank statements for further insights into the future direction of the AUD/USD pair. It is important to stay informed about global economic developments and their impact on currency pairs for effective trading strategies.
