The Australian Dollar (AUD/USD) strengthened marking the sixth consecutive day of growth against the US Dollar (USD). This increase is indicative of a larger trend of dollar weakness across the market. The dollar has been under a historic convulsive sell-off. Unfortunately, this decline has only been exacerbated by the growing trade tensions between the United States and China. Traders are wading into the murky waters with trepidation. Some of them are closely anticipating news about possible new trading agreements that could come from the current US administration.
On Wednesday, gold prices shot past the $3,340 per troy ounce threshold, setting all-time highs. This impressive rally in gold reflects investors’ growing concerns over economic stability and inflation, further driving demand for safe-haven assets. Geopolitical tensions and market volatility are at an all-time high. In response, investors are pouring into gold as a safe haven, making the yellow metal bubble up over 5% recently.
After the general bullish sentiment on the AUD/USD pair, which have managed to break above the yearly peak, moving above 0.6400. While promising, this upward momentum is not enough. As it nears the critically important 200-day Simple Moving Average (SMA), it potentially opens the door for even stronger Australian Dollar strength. The EUR/USD pair was trading near the 1.1400 area in the early Asian session on Thursday. On the other hand, this movement is a sign that the Euro is finally leveling out against the US Dollar.
Federal Reserve Chair Jerome Powell gave a fascinating speech in early June. It was unable to provide any meaningful information or announcements that would move the market. Traders were expecting big changes that would shape the direction of monetary policy, but were instead left with a lot of unknowns. To this end, market participants remain on the defensive, especially given the context of ongoing US-China trade tensions.
The continued trade conflicts between the two global titans have investors on edge. They worry that these tensions could permanently change the geopolitical dynamics of global trade to everyone’s disadvantage. Both countries are stuck in a spiral of retaliatory tariffs and trade barriers. This increasing hostility generates an already extremely sensitive market climate, forcing every trader to be on their toes.
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