The double-digit growth of global stock indices not only improved financial conditions around the world but also became a catalyst for an increase in demand for earning assets. As a result, despite the worst semi-annual GDP dynamics of the Green Continent since the global financial crisis, the Australian dollar claims to be the best performer among the G10 currencies. At the same time, releases of data on the labor market of the Green Continent and China's gross domestic product are able to give a hint about the future direction of the AUD/USD movement.
"Aussie" in 2019 is the exact opposite of the Japanese yen. The currency of the Land of the Rising Sun began the year for health thanks to a flash accident but it is highly likely that it will end it in peace. At a meeting organized by the IMF, finance ministers and heads of leading central banks of the world expressed optimism about the prospects for the global economy, calling the International Monetary Fund's forecast for global GDP of 3.3% too gloomy. According to them, the progress in trade negotiations between the United States and China, as well as the growth of business activity and stock indices set up in a major fashion. If so, then the risk appetite will remain high and the AUD/USD pair has every chance to continue the upward hike.
Dynamics of financial conditions and business activity
The fact that the negotiations between Washington and Beijing are really close to completion, which are supported by exclusive information from Reuters. According to the authoritative media, the States are easing the requirements for non-market subsidies to state-owned enterprises of the Middle Kingdom in order to conclude a historic agreement. Donald Trump has promised that it will be signed in May.
Completing a trade war will not only allow China to put its economy on the path of a V-shaped recovery but also create favorable conditions for the commodity market. China is the largest consumer of raw materials and an increase in Asian demand will boost prices and commodity prices, including the Australian dollar. From the point of view of the dynamics of iron ore, which is one of the main components of the export of the Green continent, it looks like an undervalued asset and should cost around $0.8.
Dynamics of AUD / USD pair and Iron Ore
The growth of the analyzed pair contributes to the pressure of Donald Trump at the Fed. The President of the United States has criticized the Central Bank once again, saying that if it had not been for tightening monetary policy, the American GDP would have grown not by 3% but by 4% and stock indexes would have been 500-1000 points higher. Despite the fact that investors believe that the Federal Reserve will maintain its independence, the increase in political risks is a "bearish" factor for any currency and the US dollar is no exception.
Thus, the basics of a fundamental nature for the AUD/USD rally to continue are bulls. It remains to find an information channel for purchases. In its capacity, releases of data on China's GDP for the first quarter and for the Australian labor market in March can be used.
