- AUD/USD bulls pressing against the trendline resistance zone.
- A quiet week on the calendar ahead of July RBA meeting.
AUD/USD ended the week bid and rose over 1% on Friday on US dollar weakness in a spike from 0.7649 to 0.7745 the high.
In a week where the Reserve Bank of Australia didn’t deliver any surprise at its policy meeting, the Aussie has benefited from a stabilisation in iron ore prices.
Soaring prices for iron ore, which are up over 43% since April 2021, have been the main driver for Australia’s boom.
China earlier flagged a plan to drive down the cost of Australia’s biggest export, but so far little impact has been felt. China buys 60 per cent of Australia’s iron ore.
(China reports May trade data today with exports expected to rise 32.1% YoY vs. 32.3% in April, while imports are expected to rise 53.5% YoY vs. 43.1% in April).
Meanwhile, the focus has otherwise been on the US economy, US stocks and the US dollar.
Domestically, with the exception of May’s jobs numbers on 17 June, traders will not have much to go on ahead of the July Reserve Bank of Australia.
The RBA will then likely decide on whether to roll out its yield curve control scheme to November 2024 and whether to taper asset purchases.
Stronger growth figures GDP numbers have pointed in favour of the hawks which too has been propping up the currency.
Overall, however, external factors should dominate the price action in AUD.
For instance, the dollar fell on Friday after US Nonfarm payrolls data showed hiring increased in May as the pandemic eased, but not as much as expected.
Nonfarm payrolls increased by a solid 559,000 jobs last month, helped by higher COVID-19 vaccination rates, but that was below the consensus forecast for 650,000 jobs added in May.
This has been tempering expectations that the Federal Reserve will tighten monetary policy sooner, rather than later.
AUD technical analysis
Current resistance is critical at this juncture from both a horizontal and trendline perspective.
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