AUD/USD: Bulls taking charge as US yields sink, denting a fragile DXY back below 97 handle
|- In Asia, AUD/USD fell in the wake of RBA minutes, which reaffirmed concerns over falling housing prices, but then again, most other currencies slipped versus USD.
- In North America, where traders are back from President's Day, AUD/USD is back on the bid, taking on a key resistance level 12th Feb at 0.7136 with a high of 0.7144 scored, so far.
The US dollar is being punished by NY traders, chasing the offer that started in London on the back of US yields taking a nose dive for no apparent reason at this time. However, Fed's Mester recently hit the wires and is moving in line with the doves when saying that she is comfortable with slowing or stopping the balance sheet roll-offs this year.
Meanwhile, the minutes of the Feb RBA policy meeting was as a good as a representation of the shift in RBA stance to neutral compared to the RBA statement delivered 2 weeks ago that markets are going to get.
Falling house prices is a thorn in the side of the Aussie economy:
“However, members observed that if prices were to fall much further, consumption could be weaker than forecast, which would result in lower GDP growth, higher unemployment and lower inflation than forecast.” That said the RBA remains optimistic noting: “Given that further progress in reducing unemployment and lifting inflation was a reasonable expectation, members agreed that there was not a strong case for a near-term adjustment in monetary policy,”
Now markets will look to wages and bulls hope for a lifeline from the data looking for an ongoing pickup in wage growth momentum. "We look for a modest pickup from 2.3% to 2.4%/y, a quarterly lift of +0.x%/q, and looking ahead expect closer to closer to 2¾% by year-end," analysts at TD Securities are looking for. The data tonight comes ahead of tomorrows key jobs numbers to round off a good couple of weeks of a feeding frenzy for Aussie traders.
AUD/USD levels
AUD/USD continues to recover:
"It based last week slightly ahead of our near term target at the 0.7022/15 October low and 50% retracement. Cloud support comes in at 0.7066. Rallies have eroded the 55-day ma at 0.7142 but not sustained the break – we need a close above here to reassert upside pressure to the 200-day ma at 0.7269 and the 0.7295 January high. Price action in January was exhaustive – the market charted a hammer (reversal). We have a TD perfected setup on the daily chart and a 13 count on the weekly chart. This suggests the down move ended at 0.6738," analysts at Commerzbank argued.
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