- AUD/USD rises toward 0.6325 in the early Asian session on Monday.
- China has introduced targeted measures to stimulate consumption and increase household incomes.
- Michigan’s Consumer Sentiment Index dropped in March, hitting its lowest level since 2022.
AUD/USD Strengthens Near 0.6325 in Early Asian Session
The AUD/USD pair gains momentum, approaching 0.6325 in early Asian trading on Monday. The uptick is driven by a weaker US Dollar (USD) and newly introduced measures by the Chinese government aimed at stimulating economic growth. Investors are closely monitoring upcoming Chinese economic data, including Retail Sales and Industrial Production figures, set to be released later in the day. Additionally, the US February Retail Sales report is due on Monday, adding further market anticipation.
China’s Stimulus Plan to Boost Growth
On Sunday, China announced a series of initiatives designed to stimulate domestic consumption and increase household incomes. These efforts aim to strengthen economic growth by stabilizing both the stock and property markets while also providing incentives to raise the country’s birth rate. The government’s actions are intended to counteract deflationary pressures affecting the economy.
Key measures include enhancing employment opportunities, increasing the minimum wage, and strictly enforcing paid annual leave regulations. Any positive response to China’s economic stimulus could support the Australian Dollar (AUD), given Australia’s strong trade relationship with China.
US Dollar Weakens Amid Consumer Sentiment Decline
On the US front, the University of Michigan (UoM) released its preliminary Consumer Sentiment Index for March, which dropped to 57.9—the lowest level since November 2022—from the previous reading of 64.7. This figure also fell short of market expectations, which had predicted a reading of 63.1.
Meanwhile, UoM’s five-year Consumer Inflation Expectation surged to 3.9% in March from 3.5% in February.
Fed Rate Cut Speculations Grow
Market participants widely expect the Federal Reserve (Fed) to maintain its current interest rate when it concludes its two-day policy meeting on Wednesday. According to the CME FedWatch Tool, there is nearly a 75% probability that the Fed will implement a quarter-point rate cut by June.
