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The Aussie follows stocks extending its gains, at 0.6070 as of writing. The focus next week is on the Fed decision and back to relations with China – both with the US and also with the land down under, Yohay Elam, an analyst at FXStreet, informs.

Stay up to speed with Yohay Elam’s last AUD/USD technical analyisis

Key quotes

“Sino-American relations may return to the fore and could impact the Aussie by triggering a fall in stocks, consequently sending flows away from the A$ – a risk currency. Both countries remain at odds over technology and COVID-19. Taiwan may also enter the mix. Beijing ominously called for a ‘peaceful reunification’ with the island nation.” 

“Chinese trade figures for May are projected to show a decrease in both exports and imports after a surprising rise in outgoing shipments was recorded in April. Rising orders in China imply more Australian exports.”

“US inflation is set to remain low, yet stable. The Core Consumer Price Index will likely significantly below 2%, the Federal Reserve’s target.”

“Jerome Powell, Chairman of the Fed, will likely leave interest rates unchanged and also continue ruling out setting negative borrowing costs, a one-time desire of markets. However, the Fed may introduce new lending or bond-buying schemes. Any considerable change to the already massive stimulus may further boost markets.”

“The Fed also publishes forecasts for growth, inflation, employment, and rates. These dot plots used to hint about future changes to borrowing costs, but the focus may be on how the Fed sees the economy moving forward. A gloomy outlook such as full recovery only in 2022 may weigh on markets while one that foresees full recovery in 2021 may cheer investors.”