- AUD/USD rebounds to hit fresh weekly highs above 0.7300.
- Dollar sold-off into a risk-on mood led by upbeat China’s data.
- RBA minutes downplays concerns over the AUD appreciation.
AUD/USD holds the higher ground above 0.7300 in early Europe, having staged a solid comeback from a drop to near 0.7265 region.
The aussie trade close to the eight-day highs of 0.7336, at the time of writing, adding 0.60% so far this Tuesday. The spot extends its upbeat momentum into a third straight day.
Earlier in the Asian session, the major dropped to test Monday’s low of 0.7265 amid jittery markets and firmer US dollar, as Brexit risks mounted after the UK government won the vote on the controversial Internal Market Bill.
However, the buyers quickly returned on the release of the Reserve Bank of Australia (RBA) September meeting minutes and drove the rates past the 0.7300 level.
The minutes showed that the central bank was not worried about the appreciation of the aussie dollar. Although the RBA wished for a lower exchange rate, which could support the economic recovery.
Upbeat Chinese Retail Sales and Industrial Production data further fueled the bounce in the aussie. Encouraging data suggested a sustained economic recovery in the world’s second-largest economy and boosted the appetite for higher-yielding/ risk assets at the expense of the safe-haven US dollar.
The renewed Sino-American trade optimism was perceived as an icing on the cake by the AUD bulls. China announced an extension of tariffs extension on some of the US goods imports while the US pulled back from broad import bans for cotton, tomatoes from the Xinjiang province.
Looking ahead, the pair will continue to remain underpinned by the broader market optimism, as the dollar could likely keep the back seat ahead of Wednesday’s Fed monetary policy decision. The US Industrial Production data could be eyed for some trading incentives.
AUD/USD technical levels
The bulls now target 0.7350 (psychological level), above which the next upside barrier is seen at 0.7383 (Sept 2 high). To the downside, 0.7287/85 (5-DMA/ daily pivot) could limit the declines. Daily low at 0.7267 could be put to test should the selling pressure intensify.
AUD/USD additional levels
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