- Australian Dollar (AUD) rebounds after heavy losses last week
- Chinese factory orders advance for 4th straight month
- US Dollar (USD) eases back as risk appetite increases
- US Biden – Trump live debate tomorrow
After slumping 3.5% across the previous week, the Australian Dollar US Dollar (AUD/USD) exchange rate is advancing on Monday. The pair closed on Friday at US$0.7027, just marginally off the low of US$0.7009, a level last seen in mid-July.
Strong Chinese data is helping boost the China proxy the Australian Dollar. Chinese factory profits rose for a 4th consecutive month in August, in a sign that the economic recovery in China continues to pick up pace. Industrial firms’ profits grew 19.1% in August compared to a year earlier. The data shows that whilst concerns are growing over a slowing economic recovery in Europe and the US, the economic recovery in China, the world’s second largest economy has been gathering momentum.
Sentiment is also keeping the risk sensitive Aussie Dollar buoyant. The mood in the market is upbeat on Monday as investors grow increasingly hopeful that US law makers will agree to additional fiscal stimulus.
Democrats and Republicans have been unable to agree an additional package since the $600 supplementary unemployment benefit expired in July. With the US Presidential elections less than two months away, the markets were fretting that the two sides wouldn’t agree on a new rescue package. However, on Friday, the two sides agreed to restart formal talks boosting optimism that the spending taps could soon be turned on.
Riskier assets such as stocks are soaring higher and riskier currencies, such as the Aussie Dollar are also in favour, whilst safe haven US Dollar is seeing demand falter.
Attention will now turn towards the US session. No high impacting data is due to be released. Instead investors will look ahead to first live Trump – Biden debate tomorrow. The race between the two so far is too close to call, but tomorrow’s debate could change that.
