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Australian dollar moves back above 0.7000 before momentum fades
The Aussie traded near 0.7005 after rebounding from the 50-day EMA area around 0.7016, while the move was reinforced by cooler US inflation data.
The Australian dollar briefly reclaimed the 0.7000 level, after opening near 0.6975 and climbing through each session. It poked above 0.7000 for the first time since mid-June, and was around 0.7005 at the time of writing, up 0.44%.
The currency stalled near 0.7021 and pulled back from the 50-day exponential moving average around 0.7016, a pause traders associate with how downtrends end. FXStreet noted that the pair was only a handful of pips short of a more decisive test of that declining 50-day level.
Behind the rebound, China data was mixed and primarily supportive through activity beats that matter for Australian exporters. China’s second-quarter GDP grew 0.9% quarter-on-quarter, while industrial production rose 5.3% year-on-year and retail sales returned to growth.
FXStreet also linked the Aussie strength to a shift in US rate expectations after the US June producer price index fell 0.3% month-on-month and slowed to 5.5% year-on-year, below consensus. The report said cooler-than-feared inflation extended the week’s pattern and helped reduce expectations for an additional Federal Reserve hike into September, as the US dollar weakened across the board in New York.