The Australian dollar has started the new trading in negative territory. Currently, AUD/USD is trading at 0.72923, down 0.27% on the day.
Powell speech lifts Aussie
The Australian dollar is coming off a superb week, which saw gains of 2.46%, its best weekly performance since November 2020. The week ended on a high note, as AUD/USD jumped 1.06%. Market sentiment rose after Fed Chair Jerome Powell’s Jackson Hole speech on Friday. Powell didn’t throw any bombshells, saying that the Fed would likely begin tapering before the end of the year. At the same time, Powell said that rate hikes were not imminent, as the economy still had “much room to cover” before full employment was achieved.
The Fed holds its next policy meeting on September 22, and Fed officials have been hinting that a timeline for tapering could be announced on that date. However, the timing of a rate hike is less clear. In his speech, Powell took pains to reiterate that there was no link between tapering and a rate hike. Still, a taper is likely to set off a buy- everything move and would likely trigger markets speculation about a rate hike.
On the economic calendar, mixed Australian business indicators on Monday have weighed on the Australian dollar. Inventories rose 0.2% in Q2, well short of the forecast of 1.0%. However, Company Profits surged 7.1% in the second quarter, crushing the consensus of 2.5%.
Australia’s economy showed solid expansion in the first quarter, with a gain of 1.8% (QoQ). However, the markets are bracing for a significant slowdown in Q1, with an estimate of 0.5%. GDP will be released on Tuesday, and the event is likely to be a market-mover.
- There is resistance at 0.7377, followed by 0.7445
- On the downside, 0.7225, a monthly line, has strengthened in support after last week’s strong gains by AUD. Below, there is support at 0.7103
For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-event
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