AUD Holds Firm Despite Bullish Gap, Underpinned by China's Economic Resilience
The Australian Dollar (AUD) remained resilient against its US counterpart despite opening at a bullish gap on Monday. The AUD/USD pair traded around 0.7030 during Asian hours, maintaining its gains from previous sessions. China's Manufacturing Purchasing Managers' Index (PMI) data, released on Sunday, showed a slight easing to 50.9 in July from 51.7 in June.
According to BNY's Geoff Yu, RBA Assistant Governor Sarah Hunter characterized Australia's latest Consumer Price Index (CPI) print as 'a touch softer' than anticipated, with the downside surprise mainly driven by lower fuel prices. This underscores that the moderation in price pressures is narrowly focused, rather than signaling a broader disinflation trend.
The US Dollar (USD) struggled against major peers after Japan confirmed joint currency interventions with the United States. Japanese authorities spent up to $58.97 billion on Thursday, and Tokyo signaled its readiness to intervene again if necessary. The pressure on the Greenback was further compounded by potential diplomatic developments between the US and Iran.
US President Donald Trump paused planned military strikes after reports indicated that Iran and neighboring Middle Eastern nations had requested time to finalize a deal, which would lead to the complete reopening of the Strait of Hormuz and address Iran's nuclear program. However, Iranian officials swiftly contested these claims, emphasizing that their military forces remain on high alert.