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February 6, 2025

Australian Dollar Sees Gains Amid Rising Metals Prices and PBoC’s Unchanged LPRs as reported by Bitcoinethereumnews.com

The Australian Dollar (AUD) has managed to break its two-day losing streak against the US Dollar (USD), thanks to the rising metals prices and the People’s Bank of China’s (PBoC) decision to keep its Loan Prime Rates (LPRs) unchanged. However, the AUD/USD pair’s upside may remain capped due to market caution ahead of President-elect Donald Trump’s inauguration and the potential strengthening of the US Dollar.

PBoC Keeps LPRs Unchanged, Supporting AUD

The PBoC announced on Monday that it would maintain its one- and five-year LPRs at 3.10% and 3.60%, respectively. This decision has provided support to the AUD, as China and Australia are close trading partners, and any shifts in China’s economy could have an impact on Australian markets.

Robust Economic Data from China Boosts AUD

China’s Gross Domestic Product (GDP) grew 5.4% over the year in the fourth quarter of 2024, beating market consensus of 5%. Additionally, the annual December Retail Sales increased by 3.7% vs. the 3.5% expected, while Industrial Production arrived at 6.2% vs. the 5.4% forecast. This robust economic data from China has also contributed to the AUD’s gains.

AUD Faces Challenges Ahead

Despite the current gains, the AUD could face challenges in the near future. Market expectations are growing that the Reserve Bank of Australia (RBA) might start cutting rates as early as next month. Traders are now focusing on Australia’s quarterly inflation report, set to be released next week, for clues about the future direction of interest rates.

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US Dollar Index Hovers Near 109.30

The US Dollar Index (DXY), which measures the USD’s performance against six major currencies, hovers near 109.30 at the time of writing. However, the Greenback found support as US Treasury yields rose, driven by concerns over Trump’s policy pledges, including imposing tariffs, extending tax cuts, and deporting illegal immigrants.

Technical Analysis: AUD/USD Holds Ground Above 0.6200 Support

The AUD/USD pair trades near 0.6210 on Monday, attempting to break above the descending channel on the daily chart. A successful breakout would weaken the prevailing bearish bias. However, the 14-day Relative Strength Index (RSI) remains below the 50 level, signaling bearish bias is still intact.

AUD/USD: Key Levels to Watch

The initial support is seen at the nine-day Exponential Moving Average (EMA) at 0.6202. A more substantial support level is located near the recent low at 0.6131 level. A break below this level could lead the AUD/USD pair to navigate the region around the lower boundary of the descending channel, around the 0.5900 mark.

On the upside, the AUD/USD pair encounters immediate resistance at the 14-day EMA at 0.6210, aligned with the upper boundary of the descending channel.

Conclusion

The Australian Dollar has seen gains amid rising metals prices and the PBoC’s unchanged LPRs. However, the AUD/USD pair’s upside may remain capped due to market caution ahead of President-elect Donald Trump’s inauguration and the potential strengthening of the US Dollar. Traders should keep a close eye on Australia’s quarterly inflation report and the RBA’s future interest rate decisions to gauge the AUD’s future direction.

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Source: Bitcoinethereumnews.com

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