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AUD/USD holds near 0.7000 as PBOC keeps rates steady
AUD support is capped by limited US dollar demand, slightly higher US Treasury yields, and rising risk tied to US-Iran attacks, while investors watch US ADP employment data for direction.
FXStreet reports AUD/USD was trading around the 0.7000 area on Monday, holding near recent highs after recovering from a prior decline. The Australian dollar had support from limited US dollar demand, but upside was restrained by rising geopolitical risks and slightly higher US Treasury yields.
In China, the People’s Bank of China left benchmark lending rates unchanged for a fourteenth consecutive month, with the one-year Loan Prime Rate held at 3.00% and the five-year rate kept at 3.50%. FXStreet said the decision had limited immediate impact on the Aussie, and the lack of added monetary stimulus underscored concerns about China’s uneven recovery.
On the US side, Treasury yields ticked higher, providing some support to the greenback, though a softer inflation outlook cooled expectations for aggressive Federal Reserve rate increases. FXStreet added that market pricing for fewer near-term hikes has helped limit the dollar’s recovery, and bond strategists expect shorter-term yields to ease as rate hike bets are reduced.
Geopolitical uncertainty between the United States and Iran is also weighing on risk sentiment, with FXStreet citing attacks that include military and civilian infrastructure as well as incidents involving tankers and desalination facilities. The risk-off backdrop could increase safe-haven demand for the USD and limit gains in risk-sensitive currencies like the AUD, with traders also set to monitor Tuesday’s US ADP Employment Change four-week average.
FXStreet’s technical read cited AUD/USD near 0.7002 on the 4-hour chart, consolidating above the 20-period and 100-period simple moving averages at 0.6995 and 0.6939, with the RSI around 59 indicating positive but not extreme strength.