In a move that caught the attention of global markets, the Australian Dollar gained ground after China unveiled its strategy blueprint for 2025 this past Sunday. This document lays out a future-focused plan aimed at invigorating rural areas and ensuring a comprehensive revitalization effort. Australia’s economy, which is closely linked to China’s due to robust trade relations, could see a boost if China’s stimulus measures live up to expectations.
China’s state-supported developers are making bold moves by acquiring land at prices above the asking rate, a shift sparked by governmental easing of home price restrictions to breathe new life into its real estate sector. In the early months of 2025, about 37% of land sales exceeded the initial asking price by 20% or more, a significant jump from 14% in 2024 and just 4.6% the previous year, as reported by the China Index Academy.
Challenges arose for the AUD/USD duo as former US President Donald Trump took steps to restrict Chinese investments in critical sectors within the United States. On Friday, Trump instructed the Committee on Foreign Investment to impose these limitations, citing national security concerns. The focus remains on fostering foreign investment without compromising American interests.
Meanwhile, the Reserve Bank of Australia has taken a decisive step by a surprising trim in the Official Cash Rate, cutting it by 25 basis points to 4.10%. This shift marks the first rate cut since 2019. RBA’s Governor Michele Bullock, while acknowledging the toll of high interest rates, warned against prematurely claiming victory over inflation. With the labor market maintaining its resilience, Bullock signified that further rate cuts aren’t set in stone, despite some market speculation.
In the United States, the Dollar faced headwinds as it slipped, reflecting a series of lackluster economic data releases last week. The US Dollar Index (DXY), which compares the USD to six major currencies, slid below 106.50 as indicators like Jobless Claims and the S&P Global PMI painted a bleak picture. February’s US Composite PMI dipped to 50.4 from 52.7 in January, while the Manufacturing PMI offered a slight bright spot, edging up to 51.6. Nonetheless, the Services PMI fell short, dropping to 49.7 from January’s 52.9.
Initial Jobless Claims rose slightly above expectations to 219,000, while Continuing Claims were just under projections at 1.869 million. Federal Reserve Board Governor Adriana Kugler emphasized that achieving the 2% inflation target will be a gradual journey. St. Louis Fed President Alberto Musalem discussed risks of stagflation, while Atlanta’s Raphael Bostic hinted at potential rate cuts, contingent on further economic progress.
President Trump spoke optimistically about a prospective trade deal with China, even suggesting a possible visit by President Xi Jinping. Furthermore, he touched on discussions regarding TikTok and proposed new tariffs on lumber and forest products. The recent FOMC Meeting Minutes highlighted a cautious approach with no immediate rate changes and a focus on monitoring economic indicators before making any further adjustments.
Australia’s economic data showed resilience, with the Judo Bank Manufacturing PMI inching upwards to 50.6 and the Services PMI showing a marginal increase to 51.4. On the employment front, the Australian Bureau of Statistics reported a slight uptick in the seasonally adjusted Unemployment Rate, now at 4.1% for January, aligning with forecasts.
The currency market illustrates the dynamics well. The AUD/USD is edging near 0.6370, marked by a bullish ascent within an upward channel. The Relative Strength Index holds above 50, projecting a positive sentiment. Immediate support might kick in around the nine-day Exponential Moving Average at 0.6347, while key resistances loom at 0.6400 and further up at 0.6430.
The Australian Dollar stood firm today against major currencies, particularly strengthening against the Japanese Yen, as reflected by the percentage changes detailed in the currency exchange heatmap.
