A look at the recent moves in the Australian dollar
The AUDUSD pair continues on the red zone days after the anticipated Reserve Bank of Australia (RBA) and Federal Open Market Committee (FOMC) Minutes release in the same week. The Aussie pair briefly touched the critical 0.7250 level on Tuesday, closing at 0.7254 with a 0.55% gain. It recorded a new 2020 high the next day at 0.7275, before quickly pulling back and cutting short it's 4-day win streak. It is trading at 0.7188 at the time of writing and is up by 2.01% this year to date.
The RBA Meeting Minutes has significant impact on AUDUSD, rooting from the monetary policy discussions held last August 4. The Board will stick with the current stimulus package, meaning that the benchmark interest rate will stay at 0.25%. They reiterate that the Australianeconomy is going through the toughest time since the 1930 Great Depression. However, Board members say that recovery is underway in larger parts of Australia.
While there is no adjustment on the current package measures in the country, amendments will not be ruled out if the situation calls for it. The Board is confident that inflation could be sustained within the 2-3% target band. The bank expressed its commitment to support the nation's economy as it battles the COVID-19 crisis.
Higher wedge points and declining RSI signal bearish moves, SimpleFX WebTrader
The Fed's hawkish outlook on the economy led to the slump of AUD on Wednesday. The FOMC Minutes sent the US dollar higher, fueling the rising wedge points on the AUDUSD 4H chart. This and the waning RSI spell trouble for AUDUSD bulls. Adding to the weakened AUD outlook is the recent news that Australia will turn down an offer to buy a dairy firm from a China-backed company.
On another note, the Australian dollar sees some lights as Victoria, Australia's second-most populous state, records declining cases of COVID-19. The nation's virus growth rate is still below 1, indicating that coronavirus cases in the country could continue to decline. As per Treasurer Josh Frydenberg, the declining number of cases will likely push regional equity prices and AUD because the stage 4 coronavirus restriction is less likely to extend after ending on September 13.
AUD also finds support from surging iron ore prices as China's ore import jumped to 24% in July. Import shipments to China this year reached 659.6 million tons, which is 11.8% higher than the previous year. The booming demand in the metallic rock could push AUD higher as Australia holds the biggest estimated iron ore reserves in the world.
AUDUSD treads above the 50-, 100-, and 200-day SMAs with a 2% YTD gain, SimpleFX WebTrader
Despite the recent pullback, AUDUSD maintains optimism as it moves above the 50-, 100-, and 200-day simple moving average lines, which are bullish indicators.
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This article was submitted by SimpleFX.
