AUD/USD gives up gains late, but maintains winning streak
We examine the recent price action from the AUD/USD.
- AUS/USD hit a five-week high despite negative economic news, but traders cut back the Aussie in late afternoon trading.
- Markets shook off a negative data update, after NAB’s monthly survey showed Australian business confidence slumped to the lowest level on record in March.
AUD/USD reached a five-week high as its stellar comeback rally continued before giving up most of its gains in early evening trading.
During the morning session, news that Australian business confidence had fallen to record lows failed to dent trader sentiment as better than expected data from China provided cover for the bulls.
AUD/USD was eyeing 0.65000
AUD/USD was trading at 0.6409 at 14:30 AEST just 0.0027, or less than 0.01%, above its open of 0.6419.
Just 30 minutes earlier the ‘Aussie’ was changing hands at 0.6419, up 0.4%, where it had been for much of the session despite negative economic data. The AUD/USD touched an intra-session high of 0.6433, its highest level since 12 March, as part of a seven-session winning streak.
Even with that late afternoon fall, the AUD/USD was still up around 6.4% since just 5 April after gaining further ground in weekend trading. News that more countries have slowed the spread of Covid-19 infections appear to have outweighed the impact of negative economic data.
This was perhaps reflected in the AUD/JPY trade, which was also up 0.4% as of 16:00 AEST. For reference, the Japanese Yen is considered a safe haven asset by many. Elsewhere, the AUD/NZD was up 0.2%, the AUD/GBP was up 0.15% and the AUD/EUR was up 0.3%.
Business confidence in focus
Not that it impacted the AUD/USD trade, the biggest news from the Australian session was from the closely watched NAB Business Survey.
The survey indicated business confidence had plunged to its lowest levels on record, worse than the depths of the global financial crisis, as cash-strapped businesses brace for an economic slowdown of ‘unprecedented speed and magnitude.’
But the AUD/USD was largely unmoved by this news. Some commentators have argued such negative figures had already been priced in, or traders were simply exhausted by bad news and more on the look-out for buying signals.
March data from Chinese exports and imports were not as weak as some forecasters had anticipated, according to Reuters. This fanned hopes the world’s second largest economy, and Australia’s largest trading partner, could recover quicker than expected.
Traders will be looking ahead for when US jobless claims and Chinese retail/industrial data hit the market on Thursday and Friday. That will give investors an idea on how badly the US economy has been damaged by the coronavirus shutdown, as well as more clarity behind China’s early-stage recovery.
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