The Australian Dollar (AUD) remained resilient against the US Dollar (USD) on Monday. It passed the test of the important psychological support level of 0.6500 during Sunday’s Asian trading session. Positive backdrop for the currency pair The release of China’s trade and inflation data has added a supportive backdrop for the currency pair. In turn, this has fostered a remarkable consistency. Continuing US-China trade negotiations are helping to support the AUD. This has been happening too as the US Dollar is making a broader move lower.
AUD/USD has traded strongly in recent sessions, held up by the buoyant mood driven by firm Australian economic data. China’s trade balance came in well above expectations, adding to the optimism around the two countries’ improving trade relationship. Analysts argue that these elements have propped up the Australian currency, enabling it to trade persistently above the key 70 cents psychological level.
In another opposing trend, gold prices dropped, recently trading around $3,300 per ounce. This is close to a weekly low. The latest much-better-than-expected US labour data has put a big dent in market hopes for Federal Reserve rate cuts any time soon. As hopes that these cuts are actually coming evaporate, investors are reevaluating their bullish positions in gold, contributing to gold’s current price slump.
Tesla Inc. (TSLA) stole the headline as its shares dropped under $274. That decrease followed a previous massive 17% sell-off. The price has suddenly rocketed over $332 as of mid-week this week. This marked contrast underscores the volatility of the EV market and the broader dynamic of shifting investor sentiment.
USD/JPY fell under 144.50 after Japan’s Q1 GDP data were revised higher. The shrinkage of the economy was reversed to a zero-growth economy rather than a contraction of 0.2% as previously projected. This bank revision has increased speculation for more aggressive Bank of Japan rate increases. In the meantime, growing inklings of more widespread inflation across Japan fuel the expectation. As a result, this has propped up the Japanese Yen and pressured USD/JPY in tandem with the overall weakness in the US Dollar.
The latest US jobs report has played an outsized role in moving rate cut projections, leading to some big moves in the underlying market dynamics. The reduction in bets on Fed rate cuts have hit gold prices but rippled through all currency pairs.