AUD/USD News and Analysis

• Chinese benchmark rates unchanged – AUD lower
• AUD/USD lifts on generally positive risk sentiment after S&P 500 soared on Friday
• AUD/USD longer-term downtrend slowing – plenty of tier 1 US data to keep markets engaged
• Take a look at our Q1 Australian Dollar forecast bellow:

Chinese Benchmark Rates Unchanged – AUD Lower

Chinese officials kept lending rates unchanged on Monday, leaving the one year and five year loan prime rate (LPR) at 3.45% and 4.2% - in line with expectations. Markets continue to opine for further accommodation which was evident after last week’s medium-term lending facility (MLF) rate was left unchanged, sending markets lower.

On the back of the decision to leave Chinese benchmark rates on hold, AUD/USD trended lower as can be seen on the 5-minute chart below. The Australian economy and currency is impacted by developments in China due to its close trading ties to the Asian powerhouse which also happens to be the second largest economy in the world.

AUD/USD 5-Minute Chart

Source: TradingView, prepared by Richard Snow

AUD/USD Pullback Possible on Generally Positive Risk Sentiment (S&P 500)

The AUD/USD recovery is off to a slow start on Monday, in fact the pair is slightly down on the day at 09:00 GMT. The 0.6580 level offers immediate support and it coincides with the 200 simple moving average (SMA).

Respecting this level on an intra-day time frame, sets up a continuation of the recent lift in the pair- boosted by a surge in the S&P 500 late last week. Mega-cap tech earnings are due for release this week with Netflix on Tuesday and Tesla on Thursday which could provide a further boost to sentiment. One thing to always be aware of is any forward guidance issued at these announcements, including any challenging conditions around the EV market amid increased competition in the space and economic headwinds as the global outlook remains suppressed.

However, keep an eye on the MACD, negative momentum is yet to reverse and could re-engage if 0.6580 fails to hold.

AUD/USD Daily Chart

Source: TradingView, prepared by Richard Snow

The weekly chart has AUD/USD within a medium-term downtrend, however,, lower prices were repelled at 0.6522. With a lot of US centered data due this week it appears the Aussie dollar will be at the mercy of the dollar – likely to respond to short-term volatility.

AUD/USD Weekly Chart

Source: TradingView, prepared by Richard Snow

https://www.dailyfx.com/news/modest-start-to-the-week-for-aud-pboc-maintains-benchmark-rate-20240122.html