Rising Commodity Prices Boost Australian Dollar Despite Weak Investment Data
The AUD/USD saw a 0.30% increase to 0.6810 in Thursday’s trading session, supported by the surge in commodity prices, particularly iron ore. However, concerns over weak Q2 capex survey results and ongoing struggles in non-mining business investment could limit the currency’s gains. Despite these challenges, technical indicators suggest that there is potential for further upside in the AUD/USD pair.
With uncertainty surrounding the Australian economic outlook and the Reserve Bank of Australia’s commitment to combating high inflation, markets are anticipating a modest 0.25% interest rate cut by 2024.
Key Points from the Market Movers
- Q2 business investment in Australia declined for the second consecutive quarter, highlighting economic challenges.
- Non-mining business spending experienced its first quarterly drop in three years, reflecting reduced capex in various sectors.
- Weaker capex survey results suggest a potential interest rate cut by the RBA to stimulate growth.
- Despite challenges, the AUD may benefit from monetary policy divergence compared to other major currencies.
Technical Analysis of AUD/USD
Technical indicators are favorable for the pair, with the MACD showing bullish momentum and the RSI indicating potential further gains. Resistance levels are at 0.6800 and 0.6830, while support can be expected at 0.6790 and 0.6770.
Analysis Breakdown
The Australian Dollar is experiencing support from rising commodity prices, particularly iron ore, despite challenges in business investment. Weak Q2 capex survey results may lead to an interest rate cut by the RBA to stimulate economic growth. Technical indicators suggest potential upside for AUD/USD, with resistance at 0.6800 and 0.6830. Overall, the AUD’s performance is influenced by factors such as interest rates, commodity prices, Chinese economy, and trade balance, which can impact its value in the forex market.