- AUD/USD turns towards the 0.6050 region during the Friday American session, marking acute endowal immersion.
- Trump’s aggressive tariffs cause concerns about slower global growth and inflation; Fed chairman Powell warns about a broader economic impact.
- Technical indicators are blushing a mighty bear rush; The resistance is perceptible near 0.6200, while the pair is testing long -term low.
The Aud/USD pair broke up below the key psychological support during the Friday American session, moving towards the 0.6050 region and marking its lowest level in five years. A steep drop appears after a stronger than expected American report (NFP), which increased to a wider growth in Greenback. However, the dominant catalyst of the Australian breakdown results from a fresh wave of American tariffs announced by President Donald Trump, causing global concerns about growth and causing speculation that the Australian Bank (RBA) may react with a series of aggressive stakes of rates this year. From a technical point of view, the pair flashes intensively bear, and RSI is now good on the proximal territory, and MacD prints a fresh red strap.
Daily Digest Market Movers: Trumps Trump and RBA plant Aussie
- The Australian dollar (AUD) stood in the face of a brutal sale, falling below the zone 0.6050, because investors quickly set the expectations of the RBA rate in response to the wide fresh Trump tariff package.
- The chairman of the Federal Reserve (FED) Powell, speaking at a business journalism party, admitted that the scale of the tariff campaign may have a more enduring impact on inflation and growth than initially anticipated.
- Powell emphasized the fed’s flexibility, noting that although inflation is gradually cooling, the economic impact of the tariffs remains highly uncertain, which prompted the waiting stand.
- Despite the solid report from jobs in the USA, with wages overwhelming the forecasts and the unemployment rate slightly increased, Powell emphasized the deteriorating business moods related to commercial policy.
- Markets now expect that RBA will potentially provide rates in the next few meetings, and some banks even forecast 50 BPS traffic in May.
- The retaliation of China additionally combines pressure on Aussia, because the economy based on the export of Australia remains deeply related to Chinese demand.
- The American Dollar developed broadly after the NFP print and Powell’s comments, strengthening further currencies with a high level, such as Aud.
Technical analysis
Friday’s slaughter leaves a pair of Aud/USD deeply on the territory of the bear, and the price action has fallen near the lower end of the daily range and violates the significant of the long -term support zone. The average mobility of convergence (MacD) still prints fresh red rods, strengthening the rush down, while the relative force indicator (RSI) fell to the region 27, confirming the extreme conditions sold out.
Although the stochastic oscillator seems neutral, the persistent sales are further verified by the flashing red bear of the bear/bull and piercing discrepancy in medium -sized average. All brief and long-term medium walking-10-day EMA, 20-day, 100-day and 200-day straight medium walking-bounding-treading down to the direction down, emphasizing the dominant inheritance.
Australian dollar questions
One of the most crucial factors of the Australian dollar (AUD) is the level of interest rates determined by the Reserve Bank of Australia (RBA). Because Australia is a country luxurious in resources, another key driver is the price of its greatest export, iron ore. The health of the Chinese economy, its largest trade partner, is a factor, as well as inflation in Australia, growth rate and commercial balance. Market sentiments-no matter how investors take more risky assets (risk) or are looking for sheltered people (risk)-there is also a factor and a positive risk for AUD.
Bank Reserve Australia (RBA) affects the Australian dollar (AUD), setting the level of interest rates that Australian banks can borrow each other. This affects the level of interest rates in the economy as a whole. The main goal of RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other main central banks support Aud and contrary to relatively low. RBA can also utilize quantitative alleviation and tightening to affect credit conditions, with a former negative Aud and the second positive Aud.
China is the largest trading partner in Australia, so the health of the Chinese economy has a immense impact on the value of the Australian dollar (AUD). When the Chinese economy is doing well, it buys more raw materials, goods and services from Australia, raising the demand for Aud and increasing its value. On the contrary, when the Chinese economy does not grow as brisk as expected. Therefore, positive or negative surprises in Chinese growth data often have a direct impact on the Australian dollar and its steam.
The ore of iron is the largest export in Australia, which is $ 118 billion a year according to the details of 2021, and China as the main destination. Therefore, the price of iron ore can be the driving force of the Australian dollar. Basically, if the price of iron ore increases, the audience also increases, as the aggregate demand for currency increases. Otherwise, the price of iron ore will fall. Higher prices of iron ore also cause a greater probability of a positive trade balance for Australia, which is also positive for AUD.
The commercial balance, which is the difference between what the country earns on exports compared to what it pays for imports is another factor that can affect the value of the Australian dollar. If Australia produces a highly sought after export, its currency will gain value only from the surplus of demand created by foreign buyers who want to buy exports compared to what it spends on buying imports. Therefore, a positive net trade balance strengthens Aud, with reverse effect if the trade balance is negative.
