- Summary:
- The AUDUSD pair is little changed as traders react to the PBOC interest rate decision, the rising coronavirus cases, and the new stimulus boost
The AUDUSD pair is relatively unchanged as investors reacted to the latest “stimulus” package by the Australian government to small businesses. They are also reacting to the latest coronavirus outbreak in the country and the PBOC interest rate decision.
AUDUSD reacts to new stimulus
The AUDUSD pair is reacting to a new stimulus package from the Australian government. According to Bloomberg, the Australian government will provide more support to small and medium-sized businesses. It will achieve this by providing guaranteed loans of up to A$1 million to more than 3.5 million businesses.
Previously, the maximum loans the government was guaranteeing was A$250,000. It will also add the term for the loans to 5 years from the previous 2 years. The goal of this project is to ensure that companies will continue as going concern and retain their workforce.
The AUDUSD pair is also reacting to the decision by the People’s Bank of China (PBOC) to leave interest rate unchanged. It left the 1-uear loan prime rate at 3.85% and the 5-year rate at 4.65%. That was in line with what analysts were expecting. In a statement, analysts at ING said:
“We expect that the PBoC will continue its targeted easing approach for smaller businesses. The size of the innovative lending program for SMEs, which is limited at a maximum of CNY1 trillion, could expand to CNY1.5 trillion, and interest rates on these loans could be cut by 25 basis points.”
The AUDUSD pair tends to react to the PBOC interest rate decision and other data from China. That is because the country is its biggest trading partner, buying more than 80% of its products. Finally, it is reacting to news that the current outbreak will take weeks to tame as the number of cases continues to rise.
AUDUSD technical forecast
The AUDUSD pair is trading at 0.6981, which is above the 50-day and 100-day exponential moving averages. In the past few days, the pair has been moving in a slow upward trend as shown by the ascending triangle pattern. The price has also been in a long-term ascending trend, as evidenced by the ascending trend line. The pair is likely to continue rising as bulls target the next resistance level of 0.7065.
On the flip side, a move below 0.6923 will invalidate this trend. This price is the lowest level on July 16 and is at the intersection of the ascending trend line.
AUDUSD technical forecast
