AUD/USD struggles below 0.6700 with eyes on Australia inflation, China PMI and Fed’s Powell
|- AUD/USD fails to extend the previous day’s corrective bounce, treads water of late.
- Easing of lockdown conditions in China fails to cheer the buyers amid firmer US Dollar.
- US Treasury bond yields stay upbeat ahead of Fed Chairman Jerome Powell’s first speech since November meeting.
- China’s PMIs, Aussie inflation will be eyed for immediate directions.
AUD/USD portrays the typical pre-data anxiety as it seesaws near 0.6685-90 during the early hours of Wednesday’s Asian session. In doing so, the Aussie pair fails to cheer the risk-positive headlines from Australia’s major customer China amid the recently firmer US Dollar.
That said, Chinese authorities took a sigh of relief and announced multiple measures to ease the strict lockdown in the key areas after witnessing a retreat in the daily Covid infections from a record high. However, the dragon nation kept its Zero-Covid policy intact.
Recently, Bloomberg reported the reopening of some city buildings in the greater Zhengzhou region, the home of a key iPhone plant. Earlier on Tuesday, the news broke that China's Guangdong province will allow the close contacts of Covid cases to quarantine at home.
Elsewhere, US 10-year Treasury bond yields ended Tuesday on a firmer footing, up six basis points (bps) to 3.748% by the end of the North American trading session. The same helped the US Dollar Index (DXY) to print a three-day uptrend around 106.80 despite softer statistics from the United States. The reason could be linked to the hawkish comments supporting the US Federal Reserve’s steadily high-interest rates, even if a mild cut in the aggression is expected.
New York Federal Reserve Bank President John Williams and St. Louis Fed President James "Jim" Bullard were the latest supporters of higher rates. On the other hand, the US Conference Board (CB) Consumer Confidence Index dropped to 100.2 in November versus 102.2 prior (revised down from 102.5).
Amid these plays, Wall Street closed mixed even as equities in the Asia-Pacific and Europe/UK were mildly positive.
Looking forward, AUD/USD traders will pay attention to the latest version of Australia’s Monthly Consumer Price Index for October, which is expected to be 7.4% YoY versus 7.3% prior. Although the inflation numbers are likely to print a firmer outcome and may offer an immediate uptick in matching the forecasts, the Reserve Bank of Australia’s (RBA) dovish mood can continue favoring the Aussie pair bears. Other than the Aussie inflation data, China’s NBS Manufacturing PMI for November, expected at 49.0 versus 49.2 prior, will also be necessary for immediate directions.
Above all, Federal Reserve (Fed) Chairman Jerome Powell’s first public appearance since November Federal Open Market Committee (FOMC) meeting will be crucial for the AUD/USD pair traders amid hopes of witnessing a hawkish message. The same could weigh on the pair in case Powell keeps liking bulls. Ahead of the meeting, Analysts at the ANZ said, “We expect Powell to reaffirm the Fed’s unwavering commitment to tackling inflation, the need for more measured rate rises taking account of increased two-way economic risks as policy becomes restrictive, and a degree of optimism that the Fed will be able to pull off a soft landing.”
Technical analysis
AUD/USD stays on the bear’s radar unless breaking the 0.6770 level comprising the previous support line from early November, an 11-week-old descending trend line and a 61.8% Fibonacci retracement of the pair’s August-October downturn.
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