The AUD/USD pair is making a notable move, ascending to test the resistance level at 0.6455, as the market sentiment takes a turn for the better and expectations of additional stimulus in China mount.
The Australian dollar has experienced a significant rebound during Monday’s European session. A more upbeat market mood, along with remarks from China’s President Xi Jinping, has breathed new life into the Aussie. China’s authorities have pledged to implement more proactive fiscal measures and more accommodative monetary policies in the coming year. This commitment was made at a crucial policy meeting preceding this week’s Central Economic Work conference, with the aim of jump-starting domestic consumption.
Speculation regarding further stimulus initiatives has managed to overshadow the impact of lackluster Chinese CPI data. In November, consumer inflation contracted by 0.6%, a steeper decline than the anticipated 0.4% and following a 0.3% drop in October. These figures serve as further proof of the sluggish post-COVID recovery in the world’s second-largest economy.
Back in Australia, the spotlight this week is firmly on the Reserve Bank of Australia’s (RBA) monetary policy decision slated for Tuesday. The market widely anticipates that the bank will maintain interest rates at the current restrictive level of 4.35%. The market’s attention is now centered on the timing of the RBA’s easing cycle, and any comments from the bank in this regard are likely to determine the Aussie’s short-term trajectory.
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