Australian Dollar extends its gains due to improved risk appetite amid a subdued US Dollar
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The Australian Dollar (AUD) is gaining ground due to improved risk appetite and a weakening US Dollar (USD). The AUD/USD pair is being weighed down by the subdued USD, despite stable US Treasury yields. The rise in Chinese New Loans may provide additional support for the Australian Dollar. However, the Australian money market is trending lower, disregarding a record surge in US markets. Traders are cautious ahead of crucial US inflation data that could impact interest rate expectations. The Reserve Bank of Australia (RBA) Governor Michele Bullock acknowledged positive trends in recent inflation data but stressed the need for continued progress. Chinese New Loans data showed a record high, but concerns about deflation in China are dampening sentiment. The US Dollar Index (DXY) is declining amid a risk-on sentiment in the market. The US CPI data for January is expected to show a moderation to 3.0% YoY and 0.2% MoM. Dallas Fed Bank President Lorie Logan stated that there is currently no pressing need to lower interest rates. The Australian Dollar is hovering around 0.6520, below the immediate barrier of the nine-day EMA at 0.6530. Key support is expected at 0.6500, while key resistance is at 0.6550. The AUD/USD pair is influenced by factors such as interest rates set by the RBA, the price of Iron Ore, the health of the Chinese economy, inflation in Australia, and market sentiment. The RBA's decisions impact the AUD by setting interest rates, while the health of the Chinese economy affects the AUD as China is Australia's largest trading partner. The price of Iron Ore is a driver of the AUD, as higher prices increase demand for the currency. The Trade Balance, which is the difference between exports and imports, also influences the value of the AUD. The AUD/USD pair is trading near 0.6520 in the Asian session, with a focus on risk sentiment and the upcoming US CPI data.
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