Australian Dollar rises amid Chinese stimulus and soft PCE data from the US

• AUD/USD gains traction from risk-on sentiment and China's stimulus measures.
• Hawkish RBA stance and soft US inflation maintain upside potential for AUD/USD.
• Markets are still betting on a 50 bps cut by the Fed.

The AUD/USD gained traction on Friday, climbing by 0.20% to 0.6910. Optimism surrounding China's stimulus measures, including monetary easing by the People's Bank of China (PBOC), provided support to the Australian Dollar, boosting risk appetite among investors. Personal Consumption Expenditures (PCE) figures from the US from August came in soft, also prompting USD weakness.

On one hand, the Reserve Bank of Australia (RBA) doesn't plan on cutting rates while the Federal Reserve (Fed) has already started its easing cycle, which adds downward pressure to the pair.

Daily digest market movers: Australian Dollar rises PCE data weights on the USD.

• The Australian Dollar appreciated against the US Dollar (USD) due to positive economic news from China and soft economic data from the US.
• The People's Bank of China (PBOC) implemented stimulus measures, including a rate cut and lower reserve requirement ratio, boosting risk sentiment and supporting the AUD.
• The RBA reiterated its hawkish stance, implying that the bank will maintain high interest rates until inflation returns to the target range, supporting the AUD.
• US inflation, as measured by the headline PCE Price Index, increased by 2.2% YoY in August, slightly below expectations and suggesting a modest inflationary environment.
• The core PCE Price Index, excluding food and energy, rose by 2.7%, in line with expectations and indicating a stable core inflation rate.
• Markets are betting on high odds of a 50 bps cut by the Fed in the November meeting and monetary policy divergence between the US central bank and the RBA, both supportive of the Aussie.

AUD/USD technical outlook: AUD/USD steady, hovering below 0.7000

The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) on the daily chart are strong, with the former above 50 pointing upward and the latter printing rising green bars.

With bullish momentum mounting, it all points to the pair being set for more upside. The next target is seen at 0.7000.