The Australian Dollar (AUD) is experiencing a continued rise, bolstered by recent actions from the People’s Bank of China (PBOC) and positive economic indicators from Australia. The Judo Bank Composite PMI for January has seen a slight uptick to 50.3, surpassing December’s figure of 50.2, reflecting modest expansion in the private sector.
In the context of international economic relations, comments from US President Trump have been influential. He has urged for an immediate cut in US interest rates, indicating a preference for avoiding tariffs in the ongoing trade discussions with China. These remarks followed a dialogue he had with Chinese President Xi Jinping, suggesting a hopeful outlook for resolving trade tensions.
Market participants are poised for upcoming economic reports, including the preliminary US S&P Global Purchasing Managers Index (PMI) and the Michigan Consumer Sentiment Index for January. Concurrently, the PBOC maintained a 2.00% interest rate while injecting 200 billion Yuan (approximately $27.46 billion) through a one-year medium-term lending facility aimed at selected financial institutions.
Further analysis of Australia’s economic metrics reveals that the manufacturing sector is beginning to stabilize. The Judo Bank Manufacturing PMI rose to 49.8 in January, marking its highest level in a year, breaking a long-standing contraction phase. However, a decline in the Services PMI to 50.4 indicates some slowing in that sector.
Chinese authorities are taking measures to bolster their stock markets, allowing pension funds to increase their investments in domestic equities. Additionally, a pilot program is set to permit insurers to purchase equities, aiming for an initial outlay of 100 billion Yuan in the first half of 2025.
As for the US Dollar, it remains strong against various currencies, with the Dollar Index above 108.00. Nevertheless, Trump’s push for a rate cut comes ahead of a significant Federal Reserve meeting scheduled at the end of January, where it is anticipated that the central bank will keep interest rates steady in the current range of 4.25%-4.50%. The potential impact of Trump’s tariffs on Chinese imports is also a concern for the markets, particularly given the close trade links between China and Australia.
For the AUD/USD pair, trading has been steady near 0.6280, indicating upward potential. The pair is currently positioned within an ascending channel pattern, with analysts noting bullish sentiment in the market. Resistance levels may be tested at 0.6300, while initial support is seen at 0.6252, with further levels identified at 0.6244 and 0.6230.
