- AUD/USD hits multi-month highs as dollar sell-off continues.
- AUD finds additional support from gold’s record rally.
- China’s manufacturing PMI for July is forecasted to print above 50.00.
There seems to be no stopping the AUD/USD freight train.
The currency pair just hit a 17-month high of 0.7214, pushing the month-to-date gain higher to 4.3%. The spot is on track to print gains for the fourth consecutive month, having bottomed out at 0.5506 in mid-March.
USD takes a beating
The American dollar has taken a beating across the board over the past few months with the Federal Reserve injecting massive amounts of liquidity into the system to stabilize markets and help the economy absorb shocks arising from the coronavirus outbreak.
The sentiment has turned ultra bearish over the past week or so due to a resurgence of coronavirus cases in the US, the escalating Sino-US tensions, dismal data and renewed concerns regarding the future course of the economy. The US gross domestic product fell by a record 33% in the second quarter, the Commerce Department said on Thursday.
Adding to dollar’s woes is the fiscal impasse in Washington. Republicans and Democrats have made little progress toward a coronavirus relief package even though an enhanced federal jobless benefit is set to expire on Friday.
In addition, the demand for the Aussie dollar has been boosted by gold’s record rally. The yellow metal is one of Australia’s top exports. The Reserve Bank of Australia (RBA), too, has so far remained mum on AUD’s recent surge.
The currency pair may rise further on Friday if China’s Manufacturing PMI for July, scheduled for release at 01:00 GMT, blows past expectations. The data is expected to slow the pace of expansion in the manufacturing sector slightly cooled to 50.7 in July from June’s 50.9. A reading above 50 represents expansion.
Technical levels
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