- The AUD is consolidating above the crucial 50-day moving average (MA) of 0.7119, having clocked a low of 0.7104 earlier today.
- Investors are buying risk on upbeat China data. The AUD may extend gains in Europe. The bid tone, however, may weaken if the US data surprises on the higher side.
AUD/USD is currently trading just above the 50-day MA line of 0.7119 and may extend gains in Europe, courtesy of increased risk appetite following the upbeat China data.
Both the official and private PMI manufacturing numbers released in the last 48 hours showed the activity in state-owned enterprises with relatively easy access to credit and the small and medium-sized export-oriented units ticked higher in March.
With the world’s second-largest economy showing signs of recovery, the risk appetite has improved – the Shanghai Composite has risen to its highest levels since May 2018.
Add to that the US-China trade optimism reported on Friday and the path of least resistance for the risk assets, including the Aussie dollar appears to be on the higher side.
While the Intermarket developments are AUD-positive, the domestic data released earlier today painted a mixed picture.The National Australia Bank’s (NAB) business confidence reading for March slipped to the lowest level since early 2016, while the conditions index ticked higher, beating expectations by a big margin.
However, the fact that the AUD is holding on to gains above the 50-day MA indicates the markets are currently focused on the risk reset. Looking forward, the action in the equities will likely continue to guide the pair.
The gains, however, could be erased in the NY session if the US February retail sales data shows a solid rise in consumer spending along with an uptick in the ISM prices paid and an employment sub-index.
Technical Levels
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