The Australian dollar is heading towards the US74c mark in late trade today after a jump in the Chinese stock market gave hope to investors that a bottom may be near.
At 6.43pm (GMT) the Aussie dollar was trading at US73.74c up from US73.31c in yesterday’s trade.
The Shanghai stock market end up over 3% cent higher on Monday, taking the gains to over 5% since reopening last Thursday after a string of holidays.
Although the rise is positive the index is still down over 30% from its June high.
The Australian dollar has been rallying hard ever since the disastrous non-farm payrolls figure from the US came in well below expectations leaving many to believe that interest rates in America will be on hold until at least next year.
Fed vice chairman Stanley Fischer may have put that theory to sleep on Sunday by mentioning that the US Federal Reserve expected to stick to its plan to tighten monetary policy by the end of the year, but added it’s an "expectation, not a commitment".
The market will now look ahead to data on Tuesday which includes the National Australia Business conditions survey followed by key trade data out of China which may choose the direction of the Aussie dollar.
The next key resistance level for the Australian dollar is the US74.06 level reached on the 8th of August with selling pressure expected to mount as we approach this number.