AUD/USD rises towards symbolic 70 line

It has been a good week for AUD/USD. The pair has gained 1.1 percent, its strongest weekly gains since the first week of June. On Friday, AUD/USD is trading at 0.6940, up 0.28% on the day. It’s the Fourth of July, so US markets are closed for a national holiday. There are no Australian events on the schedule, so traders can expect a quiet end to the week.

The Aussie has been an absolute steam-roller in the second quarter, with sizzling gains of 12% during that time. This is somewhat surprising, as the Chinese economy has been hit hard by COVID-19, and China is Australia’s largest trading partner. As a risk currency, one would have expected investors to keep their distance from the Australian dollar in a time of heightened uncertainty and anxiety.

Instead, the Aussie has gone on a tear against the US dollar, which is considered a safe-haven in times of trouble. The coronavirus has taken a huge human and economic toll on the United States, and the country now has the largest number of coronavirus deaths, at over 100,000. Although the US is showing signs of recovery, with improved numbers in manufacturing, services and employment, investors have not been attracted to the greenback, and the Aussie has taken full advantage of the situation.

Over in China, there was positive news from the services sector on Thursday. The Caixin Services PMI accelerated for a fourth straight month, climbing form 55.0 to 58.4 in June. In February, the PMI stood at just 26.5, so the rate of recovery has been impressive. The manufacturing industry is steady, with three consecutive readings just above the 50-level, which separates construction from expansion. However, manufacturing numbers will need to improve in order to give the Chinese economy a much-needed boost.

AUD/USD Fundamentals

  • There are no US or Australian releases on the schedule

AUD/USD Technical

AUD/USD showed little movement in the Asian session. The pair is slightly higher in European trade.

  • 0.6825 is the next support level. This line has held since June 22.
  • 0.6960 is under pressure in resistance. This line is protecting the symbolic 70 level. With AUD/USD showing an upward trend, this line could be tested early next week.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.