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Aud/USD retracts approximately 0.6450 when slowing down in China’s purchasing managers

  • AUD/USD is correct from 0.6500, as the Chinese private sector faces pressure due to the high definitions imposed by the United States.
  • Caixin manufacturing and PMI manufacturing have grown in April.
  • The Federal Reserve is expected to leave the interest rates fixed on Wednesday.

The AUD/USD pair sharply corrects approximately 0.6450 in the European session on Tuesday from the highest level in five months at 0.6500 published on Monday. Australian pair is recovered as literature in the Australian dollar (AUD) in all fields due to the slowdown in commercial activity in China.

Australian dollar price today

The table below shows the percentage of change in the Australian dollar (AUD) against the main currencies listed today. The Australian dollar was the strongest against the Swiss franc.

US dollar euro GBP JPY CAD Aud Nzd Chf
US dollar -01 % -0.24 % -0.36 % -0.03 % 0.27 % -11 % 0.42 %
euro 0.01 % -0.24 % -0.36 % -02 % 0.27 % -0.10 % 0.43 %
GBP 0.24 % 0.24 % -0.13 % 0.21 % 0.53 % 0.13 % 0.69 %
JPY 0.36 % 0.36 % 0.13 % 0.32 % 0.63 % 0.33 % 0.80 %
CAD 0.03 % 0.02 % -0.21 % -0.32 % 0.29 % -0.09 % 0.47 %
Aud -0.27 % -0.27 % -53 % -63 % -0.29 % -0.38 % 0.19 %
Nzd 0.11 % 0.10 % -0.13 % -0.33 % 0.09 % 0.38 % 0.56 %
Chf -0.42 % -0.43 % -69 % -0.80 % -0.47 % -0.19 % -56 %

The heat map shows the percentage changes in the main currencies against each other. The basic currency is chosen from the left column, while the quotation currency is chosen from the top row. For example, if you choose the Australian dollar from the left column and move along the horizontal line to the US dollar, the percentage offered in the box will represent AUD (Base)/USD (Quote).

The signs of moderate growth in economic activities in China weighs greatly on the Australian dollar, given the great dependence on Australia on its exports to Beijing.

Caixin manufacturing and purchasing managers showed in April that companies are under pressure due to the repercussions of high definitions by the President of the United States (United States) Donald Trump. Activities in both the manufacturing and services sector expanded at a moderate pace. Exports from China to the United States face 145 % import, which limits American companies to purchase from their Chinese trading partners.

At the local level, the expectations that the Australian Reserve Bank (RBA) will reduce its official cash price (OCR) at the policy meeting later this month, and also pushed Aud to Backfoot.

Meanwhile, the US dollar (USD) has regained the majority of its losses inside the day and turned into almost stability, as investors focus on the FBI’s monetary policy decision, which will be announced on Wednesday. The US dollar index (DXY), which tracks the value of Greenback for six main currencies, passed from the lowest level per day 99.50 to nearly 99.75.

According to the CME Fedwatch tool, traders have been fully priced in that the Federal Reserve will leave the interest rates fixed in the range of 4.25 % -4.50 % for the third meeting in a row.

Questions and answers in US dollars

The USD (USD) is the official currency of the United States of America, and a “reality” currency for a large number of other countries where there is a circulating alongside local notes. It is the most trading currency in the world, as it represents more than 88 % of the rotation of global foreign currencies, or on average $ 6.6 trillion in transactions per day, according to data from 2022. In the aftermath of World War II, the United States took over the British pound the world reserves. For most of its history, the US dollar was backed by gold, even the Bretton Woods agreement in 1971 when the golden standard went.

The most important individual factor that affects the value of the US dollar is the monetary policy, which is formed by the Federal Reserve (Fed). The Federal Reserve has two states: to achieve price stability (control of control) and enhance full employment. Its primary performance to achieve these two goals is to adjust interest rates. When prices rise very quickly and inflation is 2 % higher than the Federal Reserve goal, the Federal Reserve will raise rates, which helps the value of the dollar. When inflation decreases to less than 2 % or the unemployment rate is very high, the Federal Reserve may reduce interest rates, which weighs to green.

In maximum situations, the Federal Reserve can also print more dollars and quantitative mitigation (QE). QE is the process that the Federal Reserve increases significantly from the flow of credit in a suspended financial system. It is a measure of the non -standard policy used when the credit is dry because banks will not lend to each other (for fear of failing to pay the opposite end). It is the last resort when it is unlikely to achieve interest rates simply the necessary result. The Federal Reserve is the preferred to combat the credit crisis that occurred during the great financial crisis in 2008. It includes the printing of the Federal Reserve more dollars and their use to buy US government bonds mostly from financial institutions. QE usually leads to the weakest US dollar.

The quantitative tightening (QT) is the opposite process in which the Federal Reserve stops buying bonds from financial institutions and does not invest the manager from the bonds he holds in new purchases. It is usually positive for the US dollar.

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