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The Australian Dollar (AUD) has been on a steady decline against the US dollar in recent months, but the currency has been rallying recently. The AUD/USD pair is now trading at a three-week high and has a strong positive correlation with the Japanese yen. However, there are still a number of factors affecting its value, such as interest rates and risk sentiment. There are also short-term factors that affect its value on a daily basis.

Traders are watching for economic data from China, the second-largest economy in the world. If Chinese growth slows, traders’ appetite for risk could decrease. This could have an impact on the AUD/USD. Also, if Chinese inflation rates fall, a hard hit to the AUD/USD would be likely. Moreover, if the Federal Reserve’s preferred inflation data comes out strong, a strong rally could take place. Consequently, it is important for AUD/USD traders to mark calendars for the next two weeks of economic releases from China and the United States.

Traders should pay attention to PBoC statements to see whether it is planning more rate hikes in the future. If the PBoC is easing, this may help the AUD/USD. However, if it is increasing, this may weaken the AUD. Ultimately, traders should make a decision based on their risk tolerance and portfolio size.

A key issue facing the AUD/USD is the difference in interest rates between Australia and the U.S. The PBoC changes interest rates in response to the state of the Chinese economy. For instance, if the PBoC believes that the economy is overheating, it may change its monetary policy to stimulate the economy. In the other hand, if the PBoC believes the economy is not growing as quickly as it should, it may decide to reduce the interest rate.

The Australian dollar is largely dependent on the economy of China, which is the country’s largest trading partner. Consequently, bad or disappointing trade and economic data from China often lead to a drop in the Aussie. As China reopens its doors to trade in the coming months, it will also have an effect on the AUD/USD.

China has made a number of promises to support its economy, but a few key factors have raised concerns about the broader outlook for the AUD/USD. One is the looming threat of a global recession. The other is the PBoC’s abrasive monetary policy. Its intervention can push the price of the U.S. dollar down.

The AUD/USD is closely tied to risk sentiment, which is in flux. While the Fed’s aggressive rate hikes are helping to lift the US Dollar, it is also undermining the Australian currency. Meanwhile, the RBA has been stepping up its rate-hiking plans, but a less-hawkish-than-expected meeting by the RBA’s Governor Philip Lowe is weighing on the AUD.

The reopening of China has helped to boost hopes for a global recovery. It also has a positive impact on the AUD/USD, because the country’s top exports are commodities such as iron ore and copper. Furthermore, China has opened its port of Covid, which has increased demand for coal.