AUD/USD showed has started the week with a whimper, as the pair continues to drift. In Monday’s European session, the pair is trading at 0.7275, down 0.13% on the day.
RBA minutes eyed
On Tuesday, investors will be combing through the RBA minutes, which will provide details of the RBA policy meeting earlier this month. At the meeting, policymakers maintained the Cash Rate at 0.25%, where it has been pegged since March. In a statement after the meeting, RBA Governor Lowe said “the downturn is not as severe as earlier expected and a recovery is now under way in most of Australia”. If the minutes reiterate this bullish stance, the Aussie could gain ground.
Australia’s economy has been hit hard by the Covid-19 pandemic. In the second quarter, GDP contracted by 7.0%, making it the worst quarter on record. Despite this, it has been all roses for the Australian dollar, which has soared despite the pandemic, gaining 18.7% since April 1. However, the US dollar has finally shown some improvement, as AUD/USD is down 1.4% in the month of September.
Much of the impressive rise of the Aussie is due to an improving Chinese economy. China was hit by Covid-19 months before the rest of the world, and the country appears to have rebounded earlier than other countries. China’s PMIs continue to point to expansion in the services and manufacturing sectors. The Aussie is sensitive to Chinese data, as China is Australia’s number one partner. On Tuesday, China releases Industrial Production, which is projected to improve to 5.1%, after two straight readings at 4.8%.
- There is resistance at 0.7308. This is followed by resistance at 0.7333
- 0.7255 is a weak line of support. Below, there is support at 0.7227
- AUD/USD continues to put downward pressure on the 20-day MA. If the pair breaks below this line, it would indicate a downtrend for the pair