AUD/USD: No reason to return to the greenback

The AUD/USD pair hit 0.7242 last week, its highest since February 2019, trimming most gains ahead of the close but still holding in the green weekly basis. Meanwhile, China keeps reporting economic improvement, which benefits the Australian industrial outlook. All in all, the Aussie maintains its long-term bullish bias, FXStreet’s Chief Analyst Valeria Bednarik reports.

Key quotes

“Despite the pandemic hasn’t ignored Australia, the situation in the country is much better than abroad. The country has been reporting an average of 350 new cases during the last couple of weeks, with the Victoria area still in lockdown. The country has reported a total of roughly 20,000 cases since March, and the death toll reached 266.”

“Macroeconomic data coming from Australia these days, reflect the better shape of the local economy, despite the fact that it’s far from optimal. Nevertheless, the economic machine continues working in the country.” 

“China data also indicated economic growth, as the Caixin Services PMI printed at 541 in July, while the Trade Balance for the same month posted a larger-than-anticipated surplus of $63.33B. As long as the Chinese economy expands, Australia will continue to have a place to allocate its production.”

“The week ahead will bring Chinese inflation data on Monday, although the key day will be Friday when the Asian giant will publish July Industrial Production and Retail Sales. Australia will unveil some confidence indicators, although attention will be on the employment sector, as the country will publish quarterly wages on Wednesday and the monthly employment report on Thursday.”