AUD/USD rises despite Wall Street selloff as Chinese flooding lifts coal prices
Australian Dollar rises overnight versus USD despite Wall Street stocks closing lower and Chinese floods force mines to close, sending coal prices surging higher in Asia.
Tuesday’s Asia-Pacific forecast
The Australian Dollar remains on a solid footing after gaining overnight despite a weak performance in US stocks on Wall Street. The Dow Jones Industrial Average (DJIA) closed 0.76% lower on Monday. Rising energy costs are fueling concerns that inflation may be stickier than most economists and central bankers have predicted. Those higher costs could very well eat into consumer spending in other parts of the economy. A downbeat GDP report from Goldman Sachs Group Inc (All Sessions) also weighed on sentiment. The US bank cut its growth target to 5.6% for 2021.
AUD/USD rose as coal prices surged in Asia. Beijing ordered energy producers to increase production last week, which relieved some upward pressure on prices. However, flooding across China is halting mining operations. That sent coal futures in China to record highs on Monday, which lifted the Australian Dollar. Australia is a major coal exporter, and China has reportedly allowed small amounts to clear customs despite a ban on coal imports from the southern neighbour.
Oil - US Crude prices also rose overnight, further spurring inflationary concerns as crude oil hit its highest level since October 2014. The demand for energy products is rising as economies come back online following Covid-19 restrictions put in place versus the highly contagious Delta strain. New South Wales, Australia’s most populated state, loosened restrictions on Monday. Vaccination rates in Australia have seen significant progress in recent months, allowing the reopening.
Elsewhere, New Zealand reported a 0.9% rise in electronic card spending for September on a month-over-month basis. Later today, Japan will report bank lending and producer prices data for September. The Bank of Korea (BOK) is set to keep its benchmark interest rate on hold at 0.75%. Traders will also have a close eye on the United Kingdom’s July employment report in the European session.
AUD/USD technical forecast
AUD/USD put in a solid move higher overnight, breaching above the 50-day Simple Moving Average (SMA). Upward momentum eased prior to hitting the psychologically important 0.74 handle, but bulls appear to be in control for the time being. If prices head lower, the 50-day SMA will come back into focus as potential support.
AUD/USD 8-Hour Chart
This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. This information Advice given in this article is general in nature and is not intended to influence any person’s decisions about investing or financial products.
The material on this page does not contain a record of IG’s trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.
The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.
Live prices on most popular markets
You might be interested in…
Find out what charges your trades could incur with our transparent fee structure.
Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.
Stay on top of upcoming market-moving events with our customisable economic calendar.