empty
19.06.2024 05:07 PM
Three reasons to buy the Australian Dollar

Disappointing statistics on retail sales in the United States and the Reserve Bank's statement on a possible increase in the cash rate allowed AUD/USD to go on a decisive offensive. The Australian dollar, supported by divergence in monetary policy, strong global risk appetite and the recovery of the Chinese economy, can work wonders. However, first, it needs to be released from the consolidation cage.

At its June meeting, the RBA left the key rate at 4.35% but noted that it was necessary to remain vigilant about inflation. Michelle Bullock said that the central bank discussed the possibility of resuming the cycle of tightening monetary policy, which allowed the futures market to increase the chances of such an outcome in August from zero to 20%. Australian bond yields and AUD/USD have risen.

While inflation is slowing in the United States and other developed countries, it is much slower in Australia. This leaves the issue of raising the cash rate open. The Fed, against the background of slowing retail sales, inflation and the economy as a whole, is likely to ease monetary policy in September. Divergence is the guiding star of AUD/USD.

Dynamics of retail sales in the USA

This image is no longer relevant

The ongoing rally of the S&P 500 and the recovery of the Chinese economy adds fuel to the fire of the potential exit of AUD/USD from consolidation in the range of 0.658-0.67 with a further continuation of the northern campaign. So, in May, retail sales in China increased by 3.7%, and exports jumped by 7.6%. Nevertheless, the improvement in the state of China's foreign trade is a double–edged sword. The EU has already imposed duties on imports of electric vehicles, and the US has recently increased them. If Donald Trump comes to power, the situation risks worsening significantly, putting pressure on the yuan and the Australian dollar.

Despite a 3.6% increase in Chinese exports to the US in May, contrary to past trends, exports to Asian and Latin American countries are accelerating. Conversely, exports to the EU and the US have slowed due to the creation of intermediate links. The most popular destinations are Mexico and Vietnam. Therefore, if Washington wants to stifle China, it should impose tariffs on imports for intermediaries.

Dynamics and Structure of Chinese Exports

This image is no longer relevant

This image is no longer relevant

Thus, the divergence in the monetary policies of the Reserve Bank of Australia and the Fed, high global risk appetite as evidenced by the S&P 500 rally, and the recovering Chinese economy create a tailwind for AUD/USD. However, the US presidential elections and the risk of Donald Trump coming to power with his protectionist policies are major restraining factors for the pair.

Technically, on the daily chart, AUD/USD shows an attempt by the bulls to break through the upper boundary of the consolidation range of 0.659-0.67. Securing quotes above the moving averages and fair value suggests that they might succeed. It makes sense to buy as long as the pair trades above 0.6645.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

GBP/USD Overview – June 26: July 9 Is Approaching

The GBP/USD currency pair remained stagnant for most of Wednesday. Let's recall an old technical signal: if the price updates a significant extreme and immediately pulls back, there

Paolo Greco 03:39 2025-06-26 UTC+2

EUR/USD Overview – June 26: Jerome Powell Said Nothing New

The EUR/USD currency pair remained completely calm throughout Wednesday. Let's recall that this week began with a storm, provoked—of course—by Donald Trump, who first announced a ceasefire between Iran

Paolo Greco 03:39 2025-06-26 UTC+2

The Euro Regains the Initiative

The euro is attempting to resume its upward movement, although not many economic reasons support this scenario. Inflation in May rose in line with the ECB's expectations, which only strengthened

Kuvat Raharjo 00:43 2025-06-26 UTC+2

The Dollar Walks a Razor's Edge

Markets were prepared for a ceasefire in the Middle East. But are they ready for the return of trade wars? Investors have come to believe in maintaining a universal import

Marek Petkovich 00:42 2025-06-26 UTC+2

Yen Is Back in the Game

The yen failed the test as a safe-haven currency. The Israel–Iran conflict triggered a correction in USD/JPY toward a downtrend. For most of the year, investors had the impression that

Marek Petkovich 00:41 2025-06-26 UTC+2

EUR/USD. Pushing the Limits: Buyers Target the 1.1630 Resistance Level

For the second day in a row, the EUR/USD pair is testing the 1.16 level, pressing against the 1.1630 resistance level (the upper line of the Bollinger Bands indicator

Irina Manzenko 19:03 2025-06-25 UTC+2

USD/JPY: Japanese Yen Weakens Amid Declining Demand for Safe-Haven Assets

At the moment, the yen remains overshadowed by the U.S. dollar.From the perspective of the Bank of Japan's domestic policy, the summary of the June meeting reveals that some policymakers

Irina Yanina 18:46 2025-06-25 UTC+2

Iran–Israel Ceasefire: What's Next for the Markets? (A corrective decline in EUR/USD and GBP/USD is possible)

Geopolitical tensions in the Middle East continue to play a significant role in influencing financial markets. A key point of concern is the stability of the ceasefire between Tehran

Pati Gani 09:43 2025-06-25 UTC+2

The Market Has Overcome the Barrier

Neither the story of China's DeepSeek, the White House tariffs, nor the Israel-Iran conflict could halt the victorious advance of U.S. stock indices. The Nasdaq 100 has already updated

Marek Petkovich 08:44 2025-06-25 UTC+2

What to Pay Attention to on June 25? A Breakdown of Fundamental Events for Beginners

There are no macroeconomic reports scheduled for Wednesday. Over the past two days, we have witnessed a significant rally in both the euro and the pound, driven

Paolo Greco 06:36 2025-06-25 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.