Investing.com - The Australian dollar climbed against its U.S. counterpart on Monday, as sentiment improved after China's central bank set a firmer guidance rate for the yuan, easing concerns over the risk of a rapid fall in the currency.
AUD/USD hit 0.6927 during late Asian trade, the session high; the pair subsequently consolidated at 0.6905, advancing 0.63%.
The pair was likely to find support at 0.6823, Friday’s low and a nearly six-year low and resistance at 0.7005, Friday’s high.
The People's Bank of China firmed the yuan’s midpoint against the U.S. dollar for the frst time in nine trading days on Monday, after it allowed the biggest fall in the yuan in five months on Thursday, sending global stock markets tumbling.
In addition, China's central bank said on Monday that it will start implementing a reserve requirement ratio (RRR) on offshore banks' domestic deposits, in another move to stem speculation in the yuan.
Meanwhile, the dollar remained under pressure after data on Friday showed that U.S. retail sales fell unexpectedly in December while U.S. industrial production also fell last month, down for the third consecutive month.
Investors also continued to focus on the oil market, as prices remained under $30 a barrel since Friday, pressured lower by expectations that Iran will resume exports as soon as international sanctions are lifted, amid a global supply glut.
The Aussie was also higher against the euro, with EUR/AUD retreating 0.97% to 1.5777.