The Australian Dollar (AUD) kicked off the week on a positive note, reclaiming ground lost in the previous session against the US Dollar (USD). Despite a marginal dip in the USD due to higher US Treasury yields, the AUD/USD pair traded higher on Monday, buoyed by several factors driving market sentiment.
Key among these factors was the ongoing rally of the ASX 200 Index, which extended its winning streak, particularly led by robust performances in the mining and energy sectors. This upward momentum in the Australian stock market contributed to strengthening the Aussie Dollar.
Additionally, the AUD found support from a stronger Chinese Yuan (CNY), as the People’s Bank of China (PBoC) set the mid-rate for the onshore yuan higher than expected, bolstering confidence in the Australian currency.
Meanwhile, market participants awaited the release of crucial economic data, including Australia’s monthly Consumer Price Index (CPI) for February and the US Gross Domestic Product (GDP) for the fourth quarter of 2023. These data releases were anticipated to provide further insights into the economic landscape and potentially influence currency movements.
The positive sentiment surrounding the Australian Dollar was further reinforced by notable developments in the domestic market:
Australian Employment Change for February exceeded expectations, with a surge of 116.5K jobs and a lower-than-anticipated Unemployment Rate of 3.7%.
Australia’s government pledged to support a minimum wage increase aligned with inflation, aiming to alleviate the financial strain on low-income families amidst rising living costs.
China’s Premier Li Qiang’s remarks on the nation’s favorable economic indicators provided additional support to market sentiment.
On the international front, comments from Federal Reserve Bank of Atlanta President Raphael Bostic and Fed Chair Jerome Powell’s remarks during a press conference underscored the Fed’s cautious approach towards monetary policy adjustments in response to inflationary pressures and economic data.
From a technical perspective, the AUD/USD pair hovered below the 0.6540 level, with immediate resistance seen at the 23.6% Fibonacci retracement level of 0.6541. A breakthrough above this level could pave the way for further upside towards the 50-day Exponential Moving Average (EMA) at 0.6566 and the psychological barrier of 0.6600. Conversely, key support levels were identified at 0.6500 and March’s low at 0.6477.
Overall, the Australian Dollar demonstrated resilience amidst positive market dynamics, supported by strong economic data and favorable external factors, while investors remained vigilant ahead of key data releases and monetary policy developments.
