- RBA’s Bullock says financial health of businesses in Australia looks sound.
- Better-than-expected trade balance data from China supports Aussie’s recovery.
- US Dollar Index continues to move in tight range above 97.50.
After touching its lowest level in more than eight months at 0.6678 on Wednesday, the AUD/USD pair reversed its course today and rose above the 0.68 handle supported by strong trade data from China and some upbeat commentary. As of writing, the pair was up 0.8% on the day at 0.6808.
Earlier today, the Reserve Bank of Australia’s (RBA) Assistant Governor (Financial System) Michele Bullock sounded relatively positive regarding the current state of the financial conditions. “Currently, there is no strong evidence of widespread financial vulnerability in the retail sector,” Bullock said and added that they don’t see any threat to banks at the moment.
Additionally, the data from China showed that the country posted a larger-than-expected trade surplus of $45.06 billion in July. Moreover, following June’s 1.3% decline, export increased by 3.3% on a yearly basis in July and beat analysts’ estimate of -2%.
Eyes on RBA statement and Governor Lowe speech
Later at 23:30 GMT, the RBA Governor Lowe is scheduled to deliver a speech. In the early trading hours of the Asian session, the RBA is scheduled to release its monetary policy statement. Previewing this event, “We expect the Bank to revise its near term GDP forecasts lower by 0.25% pts following a soft Q1 GDP print but raise its near term unemployment rate forecasts by 0.25% pts,” said TD Securities analysts.
“Should the Bank maintain its longer-term forecasts, the weaker starting point would imply the Bank needing to cut to hit its forecasts.”
On the other hand, the decisive recovery witnessed in the 10-year US Treasury bond yield helps the US Dollar Index float above mid-97s, making it difficult for the pair to extend its daily rally above the 0.68 mark for the time being.
Technical levels to watch for
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