Chinese CPI/PPI - what to expect in AUD/USD?
|Currently, AUD/USD is trading at 0.7457, down -0.02% on the day, having posted a daily high at 0.7468 and low at 0.7447.
AUD/USD continues to consolidate in Asia after falling heavily in an extension to late Asian offers yesterday on a stronger greenback of which strength was underpinned when the ECB left rates unchanged, but extending the QE program by nine months (vs market expectations of six), and reducing monthly asset purchases from EUR 80bn to EUR 60 bln. The Q&A revealed a dovish sounding Draghi and the euro continued to fall exposing downside across the board vrs the greenback.
China CPI; look for signs that China is exporting inflation
For today, we have China’s CPI and PPI data and this will be of keen interest in the markets and will be monitored for signs that China may actually be exporting inflation.
- CPI, expected 2.2% y/y, previous 2.1% y/y
- PPI, expected 2.3% y/y, previous 1.2%
From the US session, the US has wholesale trade and consumer confidence (Michigan Univ) could be a potential catalyst as well, but to a lesser extent. Of course, the showdown will be this year's final FOMC meeting.
The Fed funds futures continued to indicate a 100% chance of the Fed making the first rate hike on 14 December since this time last year, with two more rate hikes priced in for 2017. Analysts at Westpac suggested for the day ahead, the US dollar’s rebound overnight puts the AUD back in a neutral state near term, in a 0.7400-0.7500 range.
AUD/USD 1-3 month:
"The US dollar has had an impressive rise since the US election and has potential to rise further during the months ahead, not least because the Fed will probably hike in December. Against that, coal and iron ore are more likely to sustain their dramatic rises during the months ahead. We target 0.73," - offered the analysts at Westpac.
AUD/USD levels
Spot is presently trading at 0.7458, and above the 200 sma on the 1hr sticks at 0.7447. The next resistance can be seen at 0.7459 (Daily Open), 0.7461 (Daily Classic PP), 0.7464 (Hourly 20 EMA), 0.7468 (Daily High) and 0.7476 (Daily 20 SMA). Support below can be found at 0.7457 (Hourly 100 SMA), 0.7448 (Hourly 200 SMA), 0.7447 (Daily Low), 0.7440 (Weekly Classic PP) and 0.7436 (Daily Classic S1).
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