The Australian dollar is bullish throughout the Asian session today recording a significant increase against the US Dollar. With the rise continuing to build higher, the AUDUSD pair surged to the top in daily movements. During the Asian session, the pair held below the key level of 0.7000.
Movement on this Friday (7/17) towards the close of the week, the AUDUSD has received very encouraging gains. A similar positive tone is also seen around global stock markets and could increase confidence in the current Australian Dollar bullish.
A positive tone will however continue to destroy US Dollar demand against risk assets including the Australian Dollar. Some factors are helping the Australian Dollar to be bullish at this time, one of which is the expectation of greater economic stimulus.
Other catalysts that support risk-off also come from news about the continued positive development of the Coronavirus vaccine. But all that is still being challenged by some global pessimism that lasts even longer.
Many investors are still deeply concerned about US and China relations. The reason is the latest news reported that the US government in the plan to ban Chinese Communist Party officials visit the US. That will provoke a strong reaction for China and will make investors even more worried. Both countries continue to implement policies that suppress one another.
AUDUSD Increase Still in the Shadow of COVID-19
Then concerns over the pandemic also have not subsided significantly. Considering that several US states decided to postpone a wider economic opening. Australia also briefly reported a very significant increase in cases. That could limit the efforts to increase the Australian Dollar some time.
The next AUDUSD movement can focus on the news and reports on US economic data later tonight. With the Australian Dollar rising, the AUDUSD pair is climbing towards 0.7014 when the Asian session takes place in the Asian session on Wednesday (7/15).
That level is the highest point since June 10, higher than this Wednesday's opening. Throughout today the pair has recorded an increase of 0.52%. Meanwhile, the S&P 500 futures contract also posted an increase of 0.80%.
Unfortunately, the increase in the AUDUSD pair today is still overshadowed by weaker-than-expected Australian data. Conflicts between the US and China also weighed on the rising Australian Dollar at this time. Thus providing several benefits for the US Dollar as a global safe-haven asset.
Obstacles that Inhibit the Rise in AUDUSD
Australian data on the Westpac consumer confidence index declined to -6.1% for July. Even though in July the data was + 6.1% so that this month's results disappointed global investors. One factor that undermines the data is probably because the increase in Coronavirus cases is very significant in Australia.
The next AUDUSD movement will continue to try to find signals from global problems. One problem is the conflict between the US and China which has not subsided yet. President Trump seems to have imposed sanctions on Chinese officials for human rights violations.
The Chinese government also reacted to the steps taken by the US. Data on Chinese trade for June jumped quite high. It illustrates that the Chinese economy is trying to take a reversal momentum after yesterday's pandemic crisis.
The export rate has risen to + 4.3% higher than before at + 1.4%. Import data is also higher to + 6.2% compared to the previous data at -12.7%. An increase in cases that occur in the US also threatens the Australian dollar to strengthen at this time.
But fortunately, the data of Australia and several other countries have not experienced a significant decline. Another threat to the AUDUSD also comes from the problem of the US-China conflict which is heating up again. The two countries argued over the South China Sea issue claimed by China. US consumer inflation data appear to be a short-term driver.
