Australian Dollar Strengthens as US Dollar Remains Weak
The Australian Dollar (AUD) continued its gains for the second straight session against the US Dollar (USD) on Friday (3/1). The AUD gained support following a Financial Times report that the People’s Bank of China (PBOC) is expecting a timely interest rate cut this year. As a close trading partner, any fluctuations in the Chinese economy are likely to affect the Australian market. Traders will likely be watching the December 2024 ISM US Manufacturing Purchasing Managers’ Index (PMI) due later in the North American session.
The National Development and Reform Commission (NDRC), China’s state planner, expressed confidence in achieving a sustained economic recovery by 2025. In a statement on Friday, the commission highlighted plans to significantly increase funding from ultra-long government bonds to support “two new programs,” with the expectation of steady consumption growth throughout the year.
The AUD/USD pair strengthened as the Australian Dollar recovered from two-year lows as stronger commodity prices provided support, particularly Oil and Gold, which benefit Australia’s position as a major exporter of these key resources. Oil and Gold stocks saw significant gains including Woodside Energy and Northern Star Resources.
The Australian Dollar found support after the Caixin Manufacturing Purchasing Managers’ Index (PMI) from China was released on Thursday. Wang Zhe, an economist at Caixin Insight Group, commented, “Supply and demand are improving. Manufacturers’ output and demand continued to grow as the market improved. The output gauge remained in expansionary territory for the 14th consecutive month, while total new orders increased for the third consecutive month.”
Source: FXStreet
