- Copper futures rise to support the AUD on Friday.
- Improved sentiment provides a boost to risk-sensitive currencies.
- US Dollar Index stays below 96 following housing data.
After recording modest losses in the previous two days, the AUD/USD pair reversed its direction on Friday and broke above the 0.71 handle to turn positive for the week. As of writing, the pair was trading at 0.7137, adding 0.5% on a daily basis.
Earlier today, the strong upsurge witnessed in copper prices provided a boost to the AUD and helped it disregard the disappointing GDP and industrial production data from China. After gaining more than 1% on the day, copper futures retreated slightly into London fix and was last seen up 0.8%. Additionally, the improved market sentiment as reflected by the strong rebound seen in the major equity indexes in the U.S. also allows the risk-sensitive AUD to stay resilient against its peers. At the moment, both the Dow Jones Industrial Average and the S&P 500 indexes are up around 0.7% on the day.
On the other hand, today’s data from the U.S. showed that existing home sales fell 3.4% in September as higher mortgage rates continued to hurt potential home-buyers. The US Dollar Index, which rose to its highest level in 10-days above the 96 handle, retreated slightly and was last seen down 0.12% at 95.88.
Technical levels to consider
The initial resistance for the pair aligns at 0.7150 (daily high) ahead of 0.7185 (50-DMA) and 0.7235 (Oct. 2 high). On the downside, supports could be seen at 0.7120 (20-DMA), 0.7085 (daily low) and 0.7000 (psychological level).