US Dollar Corrects
The AUD/USD currency pair is steadily consolidating gains again and this time, it is above the 0.7400 level after it had a smooth bounce back on the back of a general retreat of the US dollar.
There was a very sharp correction in the US dollar index from a high point of two years while the US dollar followed up on the profitable side of the USD/JPY currency pair following its new high point of twenty years, which it came to at 129.40.
AUD/USD price chart. Source TradingView
There was also some good news emanating from the Australian dollar after government officials in China’s city of Shanghai announced on Wednesday that the spreading Covid situation ravaging the city has shown signs of abating in the last couple of days. It was also announced that the city is preparing to reopen as some of its factories would commence operation in a closed-loop order.
In addition to the foregone, the minute from the April meeting of the Reserve Bank of Australia which has a hawkish monetary policy outlook also adds its quota to keeping the market’s sentiments around the Australian dollar a bit more afloat. The Reserve Bank of Australia’s minutes reveals that the reserve is set to start implementing its interest rate increase by June if all things are in proper order since they envisage a further increase in inflation rates.
At the beginning of trading activities on Wednesday, the major pair dropped to a session’s low point at 0.7373 following the decision of the People’s Bank of China to leave its Loan Rates without any changes in the month of April. This move came as a surprise to the market and it led to a downturn.
Market Sentiment to Determine Aussie’s Fate
Looking forward to the coming days, the perception of the market towards risk sentiments and the price action of the US dollar is going to have very significant impacts on the Australian dollar and its high yields. It is equally possible that the Federal Reserve’s Beige Book would give some new impetus to the US dollar rally.
Meanwhile, the AUD/USD currency pair goes ahead with is solid bid tone in the course of the first part of the early European session while it was observed to trade high. The Aussie equally attracted sufficient support through the hawkish minute of the reserve’s last meeting.