As the US dollar continued to fluctuate against a basket of currencies, the Australian dollar climbed for successive days. The Aussie soared significantly from 0.75890 levels to 0.77040 on Wednesday and the trend slightly dropped at 0.76800 on Thursday’s overnight session. Can the Australian currency keep its gains?
AUD in the Last Three Months
Since January, the Australian dollar has posted a rally against the US dollar, starting from 0.71815 and consolidating as high as 0.77141 in February. The AUD/USD pair has been trading between 0.75020 to 0.77140, with major movement in the last few days.
The Reserve Bank of Australia (RBA ) has kept its interest rate unchanged at 1.5 per cent in March, providing a short term decline for the Aussie. In the assessment of the central bank, the outlook continues to be supported by the low level of interest rates. “The depreciation of the exchange rate since 2013 has also assisted the economy in its transition following the mining investment boom. An appreciating exchange rate would complicate this adjustment.”
It turned out the Board judged that holding the stance of policy unchanged would be consistent with sustainable growth. Typically, higher interest rates could provide a lift to the currency as stronger dollar makes exports less competitive, eventually reducing exports and increasing imports.
Despite the lack of support from the central bank, the Aussie was still boosted by the weakness of the US dollar and the recovery of oil prices. As a commodity currency, the AUD depends heavily on the export of certain raw materials for income. In consideration of the monetary policy, the RBA acknowledges the implications of higher commodity prices for the nation’s growth.
AUD/USD Current Levels
Currently, the unexpected surge in the unemployment rate in Australia could hinder the probable rate adjustment plans of the RBA. The inconsistency of the economic data could be a negative indicator in the expected rate hike of the market players. The downbeat data hit the supposedly “consistent” uptrend of the Australian dollar.
As of 10:11 UTC, AUD/USD lost 0.08 percent to trade at $0.76698. The pair has an Intraday low of 0.76639 and an Intraday high of 0.76707. Based on the chart below, AUD/USD was near to its 50-day SMA of 0.76620 and 20-day SMA of 0.76762, indicating a tight range for the pair. Most likely, the pair will end the session at 0.76700 levels in light of the contraction of the Bollinger Bands.
The recovery of the greenback after the opening session on Friday could be a huge headwind for the Aussie. However, as the market participants weigh in the impact of the Fed rate hike this coming week, the Australian currency could still find a breather. The emerging uncertainties on Trump’s administrative orders and the anticipated US economic data can still change the game for the greenback. Thus, there could be minimal fluctuations on the Aussie, but the current range could be sustained.
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