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AUD/USD Falls From Intraday High Below 0.6700 As Australia's Trade Surplus Decreases
AUD/USD attracts buyers to reverse yesterday's retreat from the greatest level in a month. Australia Trade Balance declines in April despite improvement in Exports. Bond market consolidation following a large move and rate chatter in China also support the Aussie pair's recovery. Risk catalysts and mid-tier US data are examined for directionality.
AUD/USD falls from intraday high to near 0.6660, paring Wednesday's late rebound from 0.6640 in the early hours of Thursday. After reversing from the highest levels since May 11 the previous day, the Aussie pair declines the early Asian session's advance to re-establish the monthly high. With this, the Aussie pair justifies Australia's mixed April trade data amidst sluggish markets.
In April, Australia's Trade Balance decreases to 11,158M compared to 14,000M market expectations and 15,269M previously. Consequently, the Pacific nation's Exports increased by 5.0%, compared to 4.0% previously, while Imports increased by 2.0% for the same month.
In addition to the contradictory Australian data, the AUD/USD pair is also affected by market sentiment due to its risk-barometer status. The reason may be related to concerns about a global economic downturn and rising interest rates.
However, hawkish Reserve Bank of Australia (RBA) concerns contrast with rate decreases by Chinese banks to support the AUD/USD pair's recovery.
Several Chinese institutions, including the Industrial and Commercial Bank of China, Bank of China, and Construction Bank, lowered their benchmark rates earlier in the day. The same raises speculation that the Chinese central bank, the People's Bank of China (PBOC), will also cut rates, which in turn implies more fund flow to the economy and is positive for the AUD/USD pair due to Australian-Chinese trade ties.
In this context, the standard 10-year US Treasury bond yields increased the most in five weeks to 3.79 percent, while the two-year counterpart climbed to 4.5 percent. However, 10-year US bond coupons remain largely unaltered at 3.79 percent as of press time, whereas two-year yields continue to rise to 4.54 percent as we write. Wall Street closed mixed and S&500 Futures struggle for distinct direction, reflecting the market's mood.
Ahead of China's inflation data on Friday, the US Initial Jobless Claims report and central bank commentary can entertain AUD/USD pair traders.
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