- Aud/USD falls on the growing geopolitical risk and the lack of fresh fundamental factors in Australia.
- The American dollar gains after Israel attacks Iran’s nuclear objects, affecting the demand for the Australian dollar.
- The couple are still influenced by the expectations of the monetary policy of both the Australian reserve bank and the federal reserve.
The Australian dollar (AUD) weakens on Friday to the American dollar (USD), and the price campaign is directed by a combination of factors.
The two main factors of the last traffic motorbikes augment the geopolitical risk and interest rate expectations, which will probably still affect miniature -term price movements.
At the time of writing, AUD/USD is trading below 0.6500, and the endowal losses are 0.60%.
The sentiment of the market remains feeble after escalation of tensions in the Middle East. Reports from day to day say that Israel began targeted strikes in Iranian nuclear and military places, killing several senior officials.
This led to increased fears of a broader regional conflict. He also managed to face safe and sound demand for the American dollar, limiting the appetite at risk and pressing on a high -level currencies, such as the Australian dollar.
On the front of the data, the initial indicator of consumer moods at the University of Michigan in June showed an improvement in household trust.
However, both the annual and five years of consumers’ inflation expectations have increased slightly lower, strengthening the pliable CPI and PPI prints this week.
Looking to the future, focus on key Chinese data on Monday, including industrial production and retail sales on May, which can have a vast impact on Aud/USD due to mighty commercial connections of Australia with China.
Aust Aud/USD Technical analysis: Bear bias below 0.6500
Aud/USD is below 0.6500 on Friday, retreating after stopping the resistance around 0.6535.
The price remains circumscribed in the growing wedge pattern after a failed breakage of earlier wedge resistance, with 0.6535 now works as a key additional barrier.
Slimming level 61.8% Fibonacci in the fall of September and April at 0.6549 adds further resistance just above.
The pattern reflects the disappearance of the stubborn momentum and the risk of failure if the support levels do not maintain. Immediate support is located on a 20-day straight movable medium (SMA) near 0.6473, while stronger support is in line with the 200-day SMA level and 50% of Fibonacci level at 0.6428.
Daily Aud/USD chart
Closing below this zone will confirm the crack from the wedge and reveal the inheritance goals at 0.6338 and 0.6306.
On the other hand, a breakthrough above 0.6535 would focus on 0.6550, and a wider recovery purpose at 0.6722. The relative force indicator (RSI) is nearly 54, which indicates a potential shift of the trend when the stubborn momentum disappears.
Australian dollar questions
One of the most vital 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-not meaninglessly from whether investors take more risky assets (risk) or are looking for safe-havens (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 employ 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 vast 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.
