- Australian Dollar (AUD) moves higher supported by upbeat Chinese PMI figures and rebounding risk sentiment.
- Strong US consumer confidence data boosts optimism that the economic downturn is over.
- US Dollar investors await a testimony by Federal Reserve Chair Jerome Powell
- Australian US Dollar exchange rate (AUD/USD) on track for a monthly gain of 3.1%, its third straight month of gains.
The Australian Dollar US Dollar exchange rate settled flat on Monday at US$0.6865. At 14:15 UTC today, AUD/USD is trading +0.15% higher, towards the upper end of the daily traded range of US$0.6833 – US$0.6886.
The Aussie Dollar is finding support from an improving mood in the market following a string of better than forecast data releases which are boosting hopes that the worst of the coronavirus downturn has passed.
Yesterday US pending home sales surged 44.3% in May after tumbling in April. Analysts had forecast an increase of 18.9%.
Overnight Chinese manufacturing PMI data revealed that activity in the sector was expanding, recording 50.9 on the index, ahead of the 50.4 forecast. The level 50 separates expansion from contraction. Previous Chinese factories also returned to profit for the first time in 6 months. These figures are important for the Aussie Dollar which is considered a proxy for China.
Finally, today US consumer confidence data also surprised to the upside. Consumer sentiment jumped to 98.1 in June according to the Conference Board. Analysts had been expecting an increase to 91, up from 85 in May. This is important because a confident consumer spends more.
Recent data has shown the world’s two largest economies are finding their feet again as the economies gradually reopen. This is boosting risk sentiment across the financial markets. Demand for riskier asset, such as equities, has increased, as has demand for riskier currencies such as the Australian Dollar. Meanwhile the safe haven US Dollar is slipping lower.
Looking ahead, Australian manufacturing PMI data will be under the spotlight. Analysts are expecting the pace of contraction to have slowed considerably.
US Federal Reserve Chairman Jerome Powell is also expected to testify today. A cautious sounding Powell could unnerve investors and lift the US Dollar higher.