As risk returns, the AUD/USD trades in lockstep with S&P 500 futures.
To support the economy, the PBOC reduces RRR and saves the AUD bulls.
In the midst of a light US calendar, the pair awaits the Fed’s Monetary Policy Report.
Underpinned by the return of risk appetite and the Chinese central bank’s rate cut announcement, the AUD/USD is extending its U-turn from seven-month lows of 0.7409.
At the time of writing, the currency pair is up 0.63 percent on the day, trading near daily highs of 0.7478 in an attempt to reclaim the 0.7500 level.
The Australian dollar’s recovery was aided by a rebound in risk sentiment, with European stocks returning to the green zone on bargain hunting following Thursday’s steep drop.
The risk barometer, the S&P 500 futures, also rose 0.50 percent to 4,350, as investors shrugged off concerns about a slowing global economic recovery due to the Delta covid variant flareups.
In addition, the People’s Bank of China reduced its Reserve Ratio Requirement (RRR) to support the economy, providing another boost to the aussie’s recovery. Meanwhile, rising oil and copper prices in response to China’s move have aided the rise in the resource-loved AUD.
Earlier in the Asian session, the aussie was trading near 0.7400 after Chinese CPI and PPI growth slowed in June, owing to lower pork and commodity prices. The spot was also harmed by a temporary rebound in the US dollar.
Due to a lack of first-tier economic data from the US, all eyes are now on the Fed’s Monetary Policy Report. Meanwhile, the risk-sensitive Australian dollar will be influenced by broader market sentiment./n
