The Australian Dollar remains on a solid footing after gaining overnight despite a weak performance in US stocks on Wall Street. The Dow Jones Industrial Average (DJIA) closed 0.76% lower on Monday. Rising energy costs are fueling concerns that inflation may be stickier than most economists and central bankers have predicted. Those higher costs could very well eat into consumer spending in other parts of the economy. A downbeat GDP report from Goldman Sachs also weighed on sentiment. The US bank cut its growth target to 5.6% for 2021.
AUD/USD rose as coal prices surged in Asia. Beijing ordered energy producers to increase production last week, which relieved some upward pressure on prices. However, flooding across China is halting mining operations. That sent coal futures in China to record highs on Monday, which lifted the Australian Dollar. Australia is a major coal exporter, and China has reportedly allowed small amounts to clear customs despite a ban on coal imports from the southern neighbor.
