Australian Dollar, American Counterpart, and Good Friday

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Australian Dollar, Economy and First recession in nearly 30 years

The Australian dollar is struggling to strengthen its position against its American counterpart, as it alternates gains with losses vs. the U.S. dollar. As a result, it left a price action around AUD/USD side-lined above the 0.7600 yardstick on Good Friday.

Moreover, the AUD/USD prolongs the side-lined theme above the 0.7600 level against the scenery of the more generalized mood prevailing in the world markets on Good Friday trading. The country’s currency managed to reverse Thursday’s pullback to fresh yearly lows in the 0.7530 zone. The Australian dollar closed the session slightly in the positive territory.

Less favorable conditions from the Australian docket appear to have affected the currency earlier this week. The small drop in the manufacturing PMI in March as well as the shrinking trade surplus in February also affected the situation. As a reminder, the manufacturing PMI in March fell from 56.9 to 56.8. There are other factors as well. A monthly contraction in Home Loans as well as 0.3% drop in Retail sales from a month earlier, also in February.

The Australian dollar and U.S. nonfarm payrolls

The release of March’s U.S. nonfarm payrolls has the potential to create potential bouts of volatility as most markets are closed on Friday.

The Australian dollar gained some buying interest after 2021 lows near 0.7500 on the last day of March. At the same time, price action around AUD remains dominated by dollar dynamics. Another factor is the performance of commodity prices, particularly iron ore.

However, the situation is more complicated than it might appear at the first glance. The dovish stance of the country’s central bank has the potential to keep gains in currency somewhat capped. As occasional corrections in the commodity space will help to retain gains.

There is a high chance that the central bank will keep interest rates at current levels until at least 2024. Meanwhile, its forecast inflation could remain subdued for the time being.

Currently, the pair is retreating 0.07% to 0.7610 and faces the next support at 0.7531 seconded by 0.7383 and then 0.7000. When it comes to the upside, a break above 0.7664 would expose 0.7717 and finally 0.7849.

It is desirable to have a look at the USD/CAD pair, as this pair is fluctuating in a narrow band on Friday. The trading action remains subdued due to the Easter Holiday and this factor affected the USD/CAD pair. At the time of writing, the pair was up 0.1% on a daily basis at 1.2558.

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