The Australian Dollar holds ground ahead of the second meeting between US-China advisors on Tuesday.
Australia’s Westpac Consumer Confidence increased 0.5% MoM in June, down from May’s 2.2% rise.
US Consumer Price Index is expected to climb by 2.5% YoY in May, above April’s 2.3% rise.
The Australian Dollar (AUD) advances against the US Dollar (USD) on Tuesday, extending its gains for the second successive day. The AUD/USD pair receives support from hopes for a cooldown in the United States’ (US) latest broad tariff tensions with China. Any economic update from China could impact AUD as China and Australia are close trade partners.
US-China advisers are expected to meet again on a second day on Tuesday at 10.00 a.m. in London. Trade talks will continue as the world’s two largest economies look to ease tensions over shipments of technology and rare earth elements, per Bloomberg.
Australia’s Westpac Consumer Confidence rose 0.5% month-over-month in June, sharply falling from the 2.2% gain in May. The ongoing uncertainty over global trade weighed on sentiment. However, it was the fourth monthly increase this year, driven by the Reserve Bank of Australia’s (RBA) May rate cut and signs of easing inflation.
Australian Dollar remains steady as US Dollar moves little amid economic uncertainty
The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is remaining steady at around 99.00 at the time of writing. US Consumer Price Index (CPI) inflation is slated for Wednesday, with expectations of a rise of 2.5% YoY in May.
The US Bureau of Labor Statistics (BLS) reported that US Nonfarm Payrolls (NFP) rose by 139,000 in May compared to the 147,000 increase (revised from 177,000) in April. This reading came in above the market consensus of 130,000. Moreover, the Unemployment Rate held steady at 4.2%, and the Average Hourly Earnings remained unchanged at 3.9%, both readings came in stronger than the market expectation.
US President Donald Trump called upon, in a post published on Truth Social on Wednesday, Federal Reserve (Fed) Chairman Jerome Powell to lower the policy rate. "ADP NUMBER OUT!!! “Too Late” Powell must now LOWER THE RATE. He is unbelievable!!! Europe has lowered NINE TIMES," Trump said.
On Wednesday, Minneapolis Fed President Neel Kashkari noted that the labor market is showing some signs of slowing down. However, persistent uncertainty prevails over the economy, and the Fed must stay in wait-and-see mode to assess how the economy responds to the uncertainty.
House Republicans passed Trump’s “Big Beautiful Bill,” a multitrillion-dollar tax and spending package, which could increase the US fiscal deficit, along with the risk of bond yields staying higher for longer. This scenario raises concerns over the US economy and prompts traders to sell American assets under the “Sell America” trend. Policy experts anticipate Senate changes as GOP lawmakers aim to finalize the “big bill” by July 4.
The National Bureau of Statistics of China reported that the Consumer Price Index (CPI) dropped at an annual pace of 0.1% in May, following April’s 0.1% decline. However, the market consensus was for a 0.2% decrease in the reported period. Meanwhile, China’s CPI inflation declined by 0.2% MoM, against April’s 0.1% increase. China’s Producer Price Index (PPI) continues to weaken with an annual decline of 3.3% in May, following a 2.7% decline in April.
China's Trade Balance (CNY) arrived at CNY743.56 billion in May, expanding from the previous surplus of CNY689.99 billion. Meanwhile, Exports rose 6.3% YoY against 9.3% in April. The country’s imports fell 2.1% YoY in the same period, from a 0.8% rise recorded previously.
Australia’s Trade Balance posted a 5,413M surplus month-over-month in April, below the 6,100M expected and 6,892M (revised from 6,900M) in the previous reading. Exports declined by 2.4% MoM in April, against a 7.2% rise prior (revised from 7.6%). Meanwhile, Imports rose by 1.1%, compared to a decline of 2.4% (revised from -2.2%) seen in March. China’s Caixin Services PMI rose to 51.1 in May as expected, from 50.7 in April.
Australian Dollar hovers above 0.6500 near seven-month highs
The AUD/USD is trading around 0.6520 on Tuesday. The daily chart’s technical analysis suggests a persistent bullish bias as the pair remains within the ascending channel pattern. Moreover, the pair remains above the nine-day Exponential Moving Average (EMA), which indicates the short-term price momentum is stronger. The 14-day Relative Strength Index (RSI) is also remaining above the 50 mark, suggesting a bullish bias.
The AUD/USD pair targets an immediate barrier at a seven-month high of 0.6538, marked on June 5. Further advances could prompt the pair to explore the region around the eight-month high at 0.6687, aligned with the upper boundary of the ascending channel around 0.6690.
On the downside, the primary support appears at the nine-day EMA of 0.6489, aligned with the ascending channel’s lower boundary around 0.6480. A break below this crucial support zone could weaken the bullish bias and lead the AUD/USD pair to test the 50-day EMA at 0.6412.
AUD/USD: Daily Chart
* The content presented above, whether from a third party or not, is considered as general advice only. This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.
