AUD/USD Outlook: AUD Lifted as Chinese Trade Resumes

The Australian dollar (AUD) and the American dollar (USD) form one of the most significant currency pairs in the global currency market. Recent developments in international trade, especially the resumption of trade relations between Australia and China, have had a significant impact on the AUD/USD exchange rate. In this article we will review the current situation on the currency market, analyze the key factors affecting the AUD/USD exchange rate and give a forecast for the near future.

Current situation on the AUD/USD market

Influence of the Chinese Economy

China is Australia’s largest trading partner, and any significant change in the Chinese economy immediately affects the Australian dollar. The recent news of renewed trade between the two countries has caused the AUD to rise. The Chinese market is a major consumer of Australian raw materials such as iron ore and coal, so the resumption of supply has been a significant positive for the Australian economy.

COVID-19 Factor

The COVID-19 pandemic had a significant impact on the global economy and currency markets. However, as the world gradually recovers, economic activity is increasing, which is helping to strengthen commodity-related currencies such as AUD. The stabilization of the pandemic situation in China and Australia is also playing an important role in this process.

Analyzing the Key Factors

China’s Economic Policies

The Chinese economy continues to show strong growth, which has a positive impact on the demand for Australian commodities. In addition, China is gradually easing its trade restrictions, which is improving bilateral economic relations. Further improvement in trade conditions is expected to further strengthen the AUD.

Reserve Bank of Australia (RBA)

The Reserve Bank of Australia’s policy also has a significant impact on the AUD exchange rate. Recently, the RBA has maintained a loose monetary policy in order to stimulate economic growth. However, as the economic situation improves, a shift to a tighter monetary policy is possible, which may contribute to the AUD strength.

US Dollar

The US dollar remains one of the world’s strongest currencies and its exchange rate affects all other currencies, including AUD. The policies of the US Federal Reserve (Fed) and the state of the US economy play a key role in determining the USD exchange rate. Recently, the USD has been weakening against the backdrop of expectations of the Fed easing its monetary policy, which may contribute to the AUD strength.

Near-Term Outlook

Short-term outlook

In the short term, AUD is expected to show steady growth against USD. The main factors contributing to this growth are improving economic relations with China and weakening USD. However, there are also risks, such as possible changes in China’s economic policy or unpredictable geopolitical events.

Long-Term Outlook

In the long term, the AUD/USD exchange rate will depend on a variety of factors, including Australian and US economic policies, global economic trends and the state of the world economy as a whole. It is expected that if positive trends in the global economy and sustained demand for Australian commodities continue, AUD will gradually strengthen.

Conclusion

The outlook for AUD/USD looks positive amid the resumption of trade between Australia and China. Improved economic relations and stable demand for Australian commodities create conditions for the Australian dollar to strengthen. However, investors should be attentive to possible risks and changes in the global economy, which may affect the currency pair.

Keep a close eye on news and economic reports to react to changes in the currency market and make informed investment decisions.