Australian dollar traded on higher levels against its US peer on Monday. However, gains seemed capped, as the diminished, but still present expectations of FED scaling back its Quantitative Easing soon gave support to the US dollar.
AUD/USD hit a session high at 0.9233 at 5:36 GMT, after which consolidation followed at 0.9207, still up by 0.16% for the day. Support was likely to be found at July 18th low, 0.9139, while resistance was to be encountered at July 10th high, 0.9300.
On July 18th, in his second day of testimony on monetary policy before the Financial Services Committee in US Congress last week, FED Chairman Ben Bernanke reiterated that monetary policy will remain accommodative in the foreseeable future, even as the central bank begins to scale back its asset purchasing program. On July 17th Bernanke said the central bank expected to begin tapering asset purchases by the end of the year, but also added that monetary policy was not on a “preset course”.
On the other hand, the Australian currency gained positions after the People’s Bank of China ended a floor on borrowing costs previously set at 30% below the benchmark rate, as imparted by Bloomberg. This influenced the Aussie, as China is Australia’s largest trading partner.
Elsewhere, Australian dollar traded higher against the euro, with EUR/AUD pair erasing 0.26% to reach 1.4278.
Later on trading Monday the United States was expected to release data on Existing Home Sales, as better than projected results could heighten the demand for the greenback.
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