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AUD/USD Approaches 0.7200 Level at Week-Long Highs

The AUD/USD pair has risen to new highs of over a week during the first half of trading activity on Thursday. Now the bulls are looking for a sustained move above the 0.7200 level. At the time of writing, the pair is slightly back from the highs. But remains positive on the day around the 0.7180-85 region.

The pair has built on this week’s good rebound, from the key psychological level of 0.7000 at two-month lows, and continued to gain traction for the fourth day in a row on Thursday. The momentum is supported by a combination of market optimism and a softer tone around the US dollar.

Global risk appetite sentiment has been boosted by renewed hopes for further fiscal stimulus measures in the United States. Steven Mnuchin, US Treasury Secretary, told reporters that talks with Speaker of the House of Representatives Nancy Pelosi made great progress on long-awaited COVID-19 aid legislation.

The money flow of risk appetite has been evident by the prevailing bullish sentiment in the equity markets. Which has weighed on the US dollar’s safe-haven demand and benefited the higher perceived risk Australian dollar. The USD has also come under pressure. It faces pressure from conflicting comments from Senate Majority Speaker Mitch McConnell on fiscal aid, who said the two sides remain widely separated.

 

US macroeconomic data is likely to support the dollar

Meanwhile, the dollar is likely to remain supported due to strong US macroeconomic data released on Wednesday. According to ADP’s report, employment in the private sector grew by 749,000 new jobs in September, above the 650,000 expected. On the other hand, the Chicago PMI rose to the highest level since late 2018. Thus, reflecting on the US economy’s overall resilience.

Additionally, the bulls could also refrain from opening aggressive positions ahead of Friday’s monthly NFP jobs report. This makes it reasonable to wait for a strong continuation buy above the 0.7200 level before positioning for any short-term bullish movements.

Market participants now await Thursday’s US economic calendar. Which features the final September manufacturing PMI releases, initial weekly jobless claims, the underlying PCE price index, and the ISM manufacturing PMI. This, together with the evolution of the US fiscal stimulus talks, will influence USD price dynamics. Moreover, it could generate some trading opportunities during the American session.

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