The AUDUSD pair during the trading session on Wednesday fell, retreating from a local maximum of 0.6679. During the day, the Australian dollar against the US competitor lost 0.4%, completing trading at 0.6623.
The Australian currency remains under the pressure of soft monetary policy, which continues to pursue the Reserve Bank of Australia. In the course of a speech this morning by RBA Chairman Philip Lowe, the regulator once again confirmed that a stimulating monetary policy will continue until the targets for employment and inflation are achieved. According to Low, the latest macroeconomic data indicate the effectiveness of the previously adopted package of measures to support the economy, however, economic prospects remain uncertain. Market participants also drew attention to Low's comment that the current level of the key interest rate of 0.25% is the maximum minimum. At the same time, if the economic situation worsens, the RBA will be ready to increase the volume of purchases of government bonds.
Pressure on the AUDUSD pair may also be exacerbated by tensions between the US and China, which threatens to cancel the preliminary agreements reached in the first round of trade negotiations. On the eve of US Secretary of State Mike Pompeo said that the US Department of State no longer believes that Hong Kong is highly autonomous from China. This decision allows President Trump to take a number of measures, from the abolition of special trade agreements to the imposition of sanctions against suppressors of civil liberties in Hong Kong.
A factor in the long-term weakness of the Australian dollar may also be the projected decline in the Chinese yuan. Experts believe that rising unemployment will put downward pressure on interest rates in China. In March, the unemployment rate in the country, taking into account migrant workers who did not return to the labor market, reached 19%. Given the decline in urban employment, the central bank is likely to continue to lower rates for borrowers, which will weaken the renminbi, which means the Australian dollar is closely correlated with it.
AUDUSD SellStop 0.6570 TP 0.6370 SL 0.6610
Analytical reviews and comments on them reflect the subjective opinion of the authors and are not a recommendation for trading. Posted by Artem Deev Trader Analyst at AMarkets . The social network of forex traders is not responsible for possible losses in case of using review materials
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