The Australian dollar United States dollar exchange rate is advancing on Tuesday, paring losses from the previous session. At 14:30 UTC, AUD/USD trades +0.4% at US$0.6963. this is towards the upper end of the daily traded range.
Stronger than expected Chinese trade data is helping to underpin the Australian dollar, which is also considered a proxy for China. Chinese imports in June rose for the first time since the beginning of the coronavirus crisis. Government stimulus has boosted demand for commodity imports while exports have been fuelled by medical goods.
Chinese imports jumped 2.7% while analysts had expected a -10�cline. meanwhile exports increased 0.5%. the data indicates that the economic recovery in China is on track.
Looking ahead, investors will turn their attention to consumer confidence figures. consumer confidence is very important because consumers who are confident regarding their employment prospects and financial position tend to spend more, which is good news for the economy. a strong reading might lift the Australian dollar further.
US inflation jumped in June, by the most in 8 years as the american economy continued to reopen. consumer costs increased 0.6% month on month, ahead of the 0.5% that analysts had forecast. This was a strong rebound from May’s -0.1�cline.
The increase in prices was primarily driven by a sharp increase in petrol prices. petrol prices had fallen to record lows but rose 12.3% in June.
The increase in inflation comes after two months of declines amid the coronavirus lockdown and indicates that the United States economy is on the right track to recovery, albeit a very long slow track to recovery.
US earning season kicked off today with JP Morgan impressing investors. The surprisingly strong earnings from JP Morgan is an encouraging sign not only for the other banks but for the economy as a whole. The upbeat data boosted risk sentiment dragging on demand for the United States dollar.