Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

Free Trading Guides
Please try again

Live Webinar Events


Economic Calendar Events


Notify me about

Live Webinar Events
Economic Calendar Events






More View More
Australian Dollar Outlook: Sentiment Buoys AUD/USD but Tensions With China Mount

Australian Dollar Outlook: Sentiment Buoys AUD/USD but Tensions With China Mount

What's on this page

Australian Dollar, AUD/USD, Wall Street, Market Sentiment -Talking Points

  • Asia-Pacific stocks may see bullish session following upbeat Wall Street performance
  • Bank of Canada first major central bank to make tangible move to tighten policy
  • AUD/USD rises overnight but struggles against lingering level of resistance
The Quiz
Discover what kind of forex trader you are
Start Quiz

Thursday’s Asia-Pacific Outlook

Asia-Pacific markets may see spillover from the strength seen on Wall Street. US equity markets bounced back on Wednesday, following two days of losses, with small-cap stocks leading the charge higher. The Russell 2000 index gained an impressive 2.35% on the close, while volatility pulled back, evidenced by a 6.32% drop in the VIX volatility index. Investors have been focusing their attention on earnings amid a rather light week on the economic calendar.

Earnings have been primarily positive, helping to buoy market sentiment as stocks trade around all-time highs. Bank earnings have been positive, bolstered by strong trading revenues and a better-than-expected economic reopening. Investors are now anxious for technology stocks to report next week, with several Wall Street darlings slated to report quarterly figures. Netflix, one of the first mega-cap tech stocks to report earnings, fell over 7% on Wednesday following a subscriber miss.

The Bank of Canada’s (BoC) interest rate decision saw the Loonie strengthen as the central bank announced a pullback in the amount of government debt it will purchase. The QE taper was expected by some but was far from a certainty, especially considering Canada’s recent spike in Covid cases. The decision marks a major step in easing the extremely supportive monetary policy in response to the global pandemic.

Today’s session will be void of any high-impact economic events, but Hong Kong and Taiwan will release unemployment data. Thailand is also slated to release trade data for March. The Australian Dollar was a winner against its major peers overnight, following a better-than-expected retail sales print. Upbeat sentiment on Wall Street appeared to play a bigger factor on the Aussie-Dollar’s rise, however.

The Australian Dollar faces fresh fundamental headwinds after an early Thursday decision by Foreign Minister Marise Payne nixed two Belt and Road Initiative related deals with China, according to a report from Reuters. The move will likely worsen Australia’s already strained relationship with China and may even bring a formal retaliatory action.

AUD/USD Technical Outlook

Despite the overnight move higher, AUD/USD bulls continue to struggle to decisively overcome the 0.7750 level, indicated by the red horizontal line on the chart below. The 50-day Simple Moving Average (SMA) appears to be providing firm support to the downside, however. Price may continue to range between these two levels. A break on either side could see follow-through given the pair’s multi-day consolidation.

AUD/USD Daily Chart

audusd chart

Chart created with TradingView


--- Written by Thomas Westwater, Analyst for

To contact Thomas, use the comments section below or @FxWestwater on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.