Another week passes with the Australian dollar trying but once again failing to break through the US 75 cent mark.
Breaking through key resistance around 0.7440, AUDUSD pushed higher through the first half of the week on the back of stronger commodity prices and a more positive tone towards China’s accommodative policies to support economic growth.
The rally stalled momentarily as Australia’s June quarter inflation data came in weaker than expected, once again reinforcing the RBA’s neutral stance and any thought of a near-term rate hike. Lack of inflationary pressures in the Australian economy and sluggish wage growth will continue to weigh on the Aussie dollar as a number of headwinds continue to force price action to remain within reach of year-to-date lows.
Global risk sentiment also received a boost as Trump and EC president Juncker declared a truce on the trade war on the European front – agreeing to cease further hostilities and work towards free trade outcomes. It was viewed as a victory for Trump as he enlists Europe in his battle to end China’s trade practices as he argues that his preference for tariffs is to force trade partners to sit at the bargaining table.