Australian Dollar rebounds from recent lows amid improved investor confidence
The Australian Dollar (AUD) extends its gains against the US Dollar (USD) for a second consecutive day on Tuesday, rebounding from 0.6131, its lowest level since April 2020. The AUD/USD pair strengthened as the AUD benefitted from robust commodity prices.
US President-elect Donald Trump's economic team considers a gradual increase in import tariffs boosted investor confidence, supporting the risk-sensitive currencies like the AUD and contributing to the appreciation of the AUD/JPY pair.
The S&P/ASX 200 Index also increased by 0.2% to around 8,210 on Tuesday, snapping a three-day losing streak. Mining and energy stocks led the recovery, while Australian shares followed overnight gains on Wall Street, where investors shifted focus from megacap tech stocks to other sectors.
Traders analyzed data showing a second consecutive monthly drop in consumer confidence. Australia's Westpac Consumer Confidence Index fell by 0.7% to 92.1 points in January 2025, highlighting persistent pessimism among consumers.
The AUD/USD pair faces downward pressure as markets price in a 75% probability of a rate cut by the Reserve Bank of Australia (RBA) next month. Investors are expected to closely monitor Australian employment data, set to be released later this week, for additional clarity on the RBA's policy outlook.
The AUD also found some support from China's recent stimulus measures, given the close trading relationship between Australia and China, any changes in China's economic conditions could significantly influence Australian markets.(Cay)
Source: Fxstreet
