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The Australian dollar was higher against its US counterpart on Monday as the demand for USD weakened broadly before the Federal Reserve’s policy meeting this week.

The US dollar strengthened on Friday after the US Commerce Department said that the consumer price index rose 0.2% in August, compared to the expectations for a 0.1% gain. YoY, consumer prices increased 1.1%, above the expectations for a gain of 1.0%. The core CPI, excluding the volatile food and energy categories, climbed 0.3% this month, 2.3% in the 12 months through August.

Despite these good data, the greenback was only able to ride their effects on Friday. In fact, that day the US dollar index reached a two-week high of 96.12. However, On Monday, the US dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.22% at 95.84, off Friday’s two-week high. This is despite the fact that the CPI reports have fuelled fresh speculation over a potential US rate hike this month.

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AUD’s gain, on the other hand, was strongly supported by the rebound in oil prices on Monday, since the currency is commodity-related. Commodities like oil and gold are trading firm on Monday. The oil’s growth in the market was due to Venezuela’s statement that OPEC and non-OPEC producers were close to reaching an output deal. The clashes in Libya also raised concerns that efforts to restart crude exports could be disrupted, contributing to the raise of oil prices.

Also backing AUD’s rise in Asia was China’s house prices data for August, which rose to 9.2%, outperforming the increase of 7.9% seen in the previous month year-on-year. This added to a recent spate of upbeat economic data on the top export market for Australia.

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AUD/USD Analysis

The pair is currently trading higher than when it opened at 0.7481, presently at 0.7548, 0.76% higher than yesterday’s close. Within the day, aussie briefly touched the 0.7487 support handle but at present trying to gain over the 0.7569 resistance level. A breakthrough could present new resistance at 0.7832, and a slip under the current support would pose a new support at 0.7407. Lowest trade as of writing is at 0.7477.

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