The Australian currency has been recovering since last week’s plunge to one-month lows
The Aussie has been trending higher these days, capitalizing on the US dollar weakness. The AUDUSD pair regained the 20-DMA this week, but is yet to confirm the breakout on a daily closing basis. Last week, the pair briefly plunged to one-month lows as the Bank of Japan adjusting its yield curve control as part of its monetary policy. The Australian currency has been recovering since then, trading above the 0.6700 mark on Wednesday.
The bullish tone persists as traders continue to react to the ongoing reopening of the Chinese market. Beijing decided to scrap its quarantine measures for inbound flights even as the number of Covid cases rose. The country will remove these quarantine requirements on January 8. The news is positive for the AUD as because of the large trade volume that exists between China and Australia. Last year, Australia’s exports to China grew to $116 billion.
Adding to upbeat tone surrounding the Aussie, fresh data out of the United States disappointed, pressuring the greenback. The Case-Schiller home price index dropped by 0.5% in October, to 9.2% year-on-year, down from the previous 10.7%. Furthermore, US house prices dropped for four straight months.
The USD index is back on the defensive today after a modest bounce seen late on Tuesday. The buck is holding slightly above the 104.00 figure, struggling for direction amid thin trading conditions ahead of the New Year holiday. The dollar remains on the defensive this month, holding just slightly above June lows registered below 104.50 in mid-December. Should the pressure persist in the near term, the Australian currency may regain the 0.6800 mark, followed by the 200-DMA, today at 0.6870.