The Australian dollar closed the previous week on a low level, hardly holding on to 0.89. It already began this week with a gap higher to 89.20, and continued advancing since then.
After peeking above 0.90 the pair is still struggling with this very round line. Can it make the break higher? Here are three things supporting the Aussie.
Here is how the move looks on the chart. The reasons are below:
- Syria: US president Barack Obama surprised the world and announced he would seek Congressional approval for acting militarily against Syria. After an attack seemed imminent, even in the past weekend, tensions are now lower. The Aussie is a “risk currency” and enjoyed this risk taking.
- China: The official Chinese manufacturing PMI came out at 51 points in August, a bit above 50.6 expected and it advanced from 50.3 in July. If the official figure is doubted, also the unofficial and highly regarded HSBC / Markit figure came out at 50.1 points, just above the 50 points mark separating growth and contraction.
- Australia: At the wake of the new month, Australia posted quite a figures. The AIG Manufacturing Index advanced from 42 to 46.4 points and commodity prices fell less than predicted. Yet most importantly, building approvals jumped by 10.8%, more than double the early expectations for a rise of 4.1%. This shows that the economy outside the mining sector is not dormant.
If AUD/USD breaks 0.90, the next levels are 0.9040 and 0.9180. For more levels, events and analysis, see the AUD/USD forecast.
The next big event is the rate decision early on Tuesday. No change is expected.