- AUD / USD is hovering around its highest since December 2018.
- Weak US dollar joins bullish stocks and commodities to favor Australian bulls.
- The China-U.S. Fight draws fewer audiences, as do virus updates, with U.S. policymakers still scrambling over the stimulus package.
- NBS’s Chinese manufacturing PMI could drop to six-month low, with second-tier Australian data due to be released as well.
AUD / USD is higher for the fifth consecutive monthly gain while rising to 0.7365 at the start of Monday’s Australian session. The pair jumped to the December 2018 high on Friday after the US dollar slashed the previous day’s Fed-supported gains. Strong performance in stocks and commodities, especially gold, also helped the bulls. Traders can now wait for key activity figures from China for a new boost.
The bulls keep it pure …
With the US dollar’s heavy losses pushing it back to a 27-month low, AUD / USD prices marked a sharp rise to the previous year’s peak. The market reassessment of the Fed Presidency’s Average Inflation Targeting (AIT) method, allowing inflation to exceed the 2.0% target, joined the pessimistic data from the Core PCE for weigh on the greenback. In doing so, the good numbers from the US Consumer Sentiment Index and Chicago Fed Manufacturing were mostly overlooked.
The north, led by global stocks and commodity prices, also appealed to the bulls. While the S&P 500 refreshed the record, gold also gained $ 1,965. In addition, the 10-year US Treasury fell 2.2 basis points (bps) to 0.72% at the end of Friday’s session.
Coronavirus (COVID-19) numbers have remained mostly static, with the United States, Brazil and India taking the top spots. Recently, a US health official, Dr Fauci, rekindled expectations for the early vaccine. Previously, US President Donald Trump pushed for a cure for the pandemic.
Elsewhere, the United States and China continue to hate each other with US President Trump’s latest comments suggesting ending dependence on China.
While there haven’t been any key bullish fundamentals from home, traders in the pair can anxiously await China’s PMI data for August for new direction. TD Securities Inflation in Australia for the current month is also listed. Forecasts suggest that the main NBC manufacturing PMI falls to 48.7 from 51.1, while the non-manufacturing PMI could weaken to 52.1 from 54.2 previously. Manufacturing activity numbers, if they match expectations, will mark its first contraction since February and may trigger a further decline in the pair.
With the flashing overbought signals from the RSI, an ascending trendline between the March 2020 high and the December 2018 high near 0.7400 becomes the key resistance to watch for the bulls before aiming for the July 2018 high around 0.7485. Alternatively, the pair’s declines below the previous year’s high of 0.7296 will highlight the August 19 high near 0.7275 as support.