- AUD/USD has soared above 0.6670 on solid Trade Balance data.
- Caixin Manufacturing PMI has landed lower at 49.5 vs. the estimates of 50.3 and the former release of 50.
- The USD index might slip further below 101.00 amid rising concerns over the US debt ceiling issue and banking jitters.
The AUD/USD pair has climbed swiftly above 0.6670 on upbeat Australian Trade Balance data. The Australian Bureau of Statistics has reported upbeat Trade Balance data. The economic data has jumped to 15,269M, higher than the estimates of 12,650M and the former release of 13,870M.
Meanwhile, the Caixin Manufacturing PMI (April) data have missed estimates. The economic data has landed at 49.5, lower than the estimates of 50.3 and the former release of 50.0. Despite fiscal and monetary support the Chinese economy is struggling to remain on track of progress.
It is worth noting that Australia is the leading trading partner of China and weak Chinese manufacturing PMI would impact the Australian Dollar.
On Wednesday, the Australian Dollar didn’t show a meaningful action despite the release of upbeat Retails Sales data. Australian agency reported an acceleration in retail demand by 0.4%, the slowest annual pace due to higher interest rates from the Reserve Bank of Australia (RBA), as reported by Reuters. Households have trimmed spending on core goods led by the mounting burden of interest obligations fur to higher borrowing costs.
Earlier this week, RBA Governor Philip Lower unexpectedly hiked interest rates by 25 basis points (bps) to 3.85% while the street was expecting a continuation of a neutral policy. The RBA hiked its Official Cash Rate (OCR) despite the consistent softening of Australian inflation.
The US Dollar Index (DXY) has retreated after a poor recovery attempt to near 101.20. The USD index is expected to slip further below the crucial support of 101.00 amid rising concerns over US debt ceiling issue and banking jitters.
The White House has reported that a default on U.S. payment obligations due to the failure of the debt ceiling raise on time could result in the loss of 8.3 million jobs and a 6.1% reduction in economic output, as reported by Reuters.
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The Australian Dollar (AUD) has surged higher against the US Dollar (USD) in the midweek trading session, driven by better than expected Australian Trade Balance data which showed exports outstripping imports by a larger margin for the month of February.
As of writing, the AUD/USD pair is trading above 0.6670, having gained around 0.50 percent for the day.
The positive figures from the Australian Department of Foreign Affairs and Trade (DFAT) showed exports outgrown imports by a wide margin of A$1.6 billion in February, far beating the market forecast of a A$700 million surplus.
Those figures were driven by a 4.6 percent rise in goods and services exports, in particular the energy and metals sector.
This comes despite the worsening economic outlook due to the spread of the coronavirus, with data from the Caixin Manufacturing PMI for March falling back into contraction territory.
Economists highlighted the fact that the coronavirus has impacted global supply chains and hampered manufacturing sentiment, although it was noted that the AUD/USD has continued to climb amidst growing investor risk appetite.
The AUD was also helped by a weaker US Dollar, as US Treasury yields traded near multi-year lows and Federal Reserve still contemplating further rate cuts.
Going forward, analysts expect the pair will remain sensitive to economic data releases, coronavirus updates and risk sentiment as investors weigh the possibility of more economic stimulus from central banks.