The Australian dollar continues enjoying a comeback. After having had a successful week, the move continues and the pair already touched 0.79. This is an impressive advance, especially after the round 0.79 level already seemed in sight.
Here are 3 reasons for the latest move:
- Optimism about China: the HSBC Flash Manufacturing PMI surprised with a rise above the critical 50 point level: to 50.1 points for February. This was above expectations and reflects some kind of pickup in Australia’s No. 1 trade partner. Here is the preview for the event.
- Encouraging Australian data: The wage price index rose by a healthy 0.6% in Q4. While this was in line with expectations, the rise shows that inflationary pressured are not set to disappear anytime soon. In addition, quarterly construction work done dropped less than expected, by 0.2% instead of 1.2% that economists had predicted.
- Weak USD: It took markets quite some time to digest the messages that Fed Chair Janet Yellen tried to convey, but when the dust settled, the USD was sold off and the Aussie reaped the benefits. She basically said that even after a removal of the word “patienceâ€, a rate hike is not imminent.
Can AUD/USD make an attempt to reach 0.80? A lot depends on the decision by the RBA next week. On one hand, the central bank can be encouraged by the news. However, it has made it clear over and over again that it wants a weaker currency.
Here is how it looks on the chart:
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