AUD/USD stays below 0.7780

AUD/USD stays below 0.7780


AUD/USD to target February high

AUD/USD stays below 0.7780 amid firmer US dollar, mixed Chinese data

The AUD/USD pair is accumulating losses on Monday in the early European session. The pair failed to capitalize on Friday’s gains and confided in a narrow trade band between 0.7745-0.7785 for the time being.

At the time of writing, the AUD/USD pair is trading at 0.7763, down 0.17% on the day.

The Aussie pared some of the previous day’s gains on mixed Chinese economic data. Retail Sales in China disappointed the market as it grew 17.7% YoY in April as compared to 34.2% in  March, much below the market expectations of 24.9% growth estimates. The heavy deviation in the reading took a toll on the performance of the AUD against the US dollar, as China is the biggest market for  Australian exports.

Meanwhile, the National Bureau of Statistics of China said on Monday that the Chinese economy maintained a steady pace of economic growth. The Industrial Output edged higher to 9% YoY in April and matched market expectations.

Additionally, retreating iron ore prices also drag the pair lower, as lower commodity prices directly affect the commodity-linked aussie.

On the other hand, the US dollar gained on the market volatility amid escalating Middle East tensions, erasing some of Friday’s losses. The greenback index (DXY) gained 0.09% to 90.39 on Monday. The disappointing US Retail Sales data on Friday echoed the continuation of the Fed’s ultra-easy monetary policy, which drove investors away from the greenback on improved risk appetite.

In the absence of any major fundamental catalyst, investors turn their attention to the Fed’s speech by Vice-Chairman Richard Clarida today at 14:05 GMT.

As for now, the dynamics around the US dollar should keep the pair’s performance under control.

By Rekha Chauhan

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