- AUD/USD rises to about 0.6215 in the early Asian session on Monday.
- The Chinese NBS came in the strongest expected in February.
- Trump said he would impose an additional 10 % tariff on China.
The AUD/USD pair regains some lost land to approximately 0.6215, which led to a six -day loss during the early Asian session on Monday. Chinese optimistic economic data provides some support to the husband. Later on Monday, the China Procurement Manager Index in China (PMI) will be in the spotlight.
The Chinese Procurement Directors Index returned to a positive area in February, where the country increased measures to enhance its economy. Data issued by the Chinese Federation of Logistics and Procular Services (CFLP) on Saturday showed that the NBS purchasing managers in the country had improved 50.2 in February 49.1 before. This number came stronger than the expected 49.9. Meanwhile, NBS’s non -manufactured purchasing managers rose to 50.4 in February 50.2 in January, overcoming 50.3.
The Chinese PMI report raised the Australian AUD (AUD) because China is a major trading partner in Australia. However, the US tariff imposed by the United States threatens to suit manufacturing and may limit the upward trend.
US President Donald Trump said an additional 10 % tariff will be placed on Chinese imports that start on Tuesday, which doubles the first 10 % rate that entered last month. The escalating trade tensions between the United States and China can enhance safe infiltration flows and benefit from the US dollar (USD) in the short term.
Questions and answers in Australian dollars
One of the most important factors for the Australian dollar (AUD) is the level of interest rates set by the Australian Reserve Bank (RBA). Since Australia is a resource -rich country, the other main engine is the largest export price, iron ore. The health of the Chinese economy, the largest commercial partner, is a factor, as well as inflation in Australia, the rate of growth and commercial balance. Market morale-whether investors are eating more risky assets (risk) or searching for safe materials (risk)-is also a worker, with positive risks for AUD.
The Australian Reserve Bank (RBA) affects the Australian dollar (AUD) by determining the level of interest rates that Australian banks can persuade each other. This affects the level of interest rates in the economy as a whole. The main goal of RBA is to maintain a stable inflation rate of 2-3 % by setting interest rates up or down. Relatively high interest rates are supported compared to other main central banks, and relatively low vice versa. RBA can also use and tighten quantitative dilution to influence credit conditions, with previous AUD negative and positive to AUD.
China is the largest commercial partner in Australia, so the health of the Chinese economy is a major impact on the value of the Australian dollar (AUD). When the Chinese economy does a good job, it buys more raw materials, commodities and services from Australia, raising the demand for AUD, and raising its value. The opposite is the case when the Chinese economy does not grow at the speed available. Positive or negative surprises in Chinese growth data, therefore, they often have a direct impact on the Australian dollar and its wives.
Iron Ore is the largest export in Australia, as it represents 118 billion dollars annually according to data from 2021, with China as its main destination. Therefore, the price of iron ore can be an engine for the Australian dollar. In general, if the price of iron ore rises, the AUD also rises, as the total demand for the currency increases. The opposite is the case if the price of iron ore decreases. Iron ore prices also tend to increase the possibility of a positive commercial balance for Australia, which is also positive for AUD.
The commercial balance, which is the difference between what a country gains from its exports in exchange for what it pays to its imports is another factor that can affect the value of the Australian dollar. If Australia produces very required after exports, its currency will obtain a value of the excess demand created from foreign buyers who seek to buy its exports in exchange for what it spends to buy imports. Therefore, the positive net trade balance enhances AUD, with the opposite effect if the trade balance is negative.