AUD/USD back below 75c heading into the week

OzForex Research OzForex Foreign Exchange

AUD - Australian Dollar

The Australian dollar posted its third consecutive week of gains last week, latching on to risk on sentiment and soaring global equity prices. On Friday, AUD/USD initially rose above the key 0.7500 handle throughout trade however these levels could not be maintained as the pair retreated back to intraday lows of 0.7455 before recovering slightly into the close. It was a similar story for the New Zealand dollar against the greenback, with the pair currently changing hands around the 0.7150 level which sees the AUD/NZD cross rate trading around the 1.0430 handle heading into this week.

Although Monday is quiet on the data front, with New Zealand observing a public holiday, we are set to receive some pretty important datasets this week. Wednesdays Australian CPI data will be closely watched; analysts are expecting an annual pace of 3.8% before attentions will shift offshore where we are set to receive preliminary Q3 GDP data for the USA. The week is set to be rounded out by Australian retail sales on Friday.

From a technical perspective, downside supports are visible at retracement levels near 0.7400 with a break below this opening the door for a test of 0.7320. 0.7550 remains the key resistance level on the topside with rallies through this level expected to meet further resistance at 0.7620.

Key Movers

Although EUR/USD held firm around the 1.1650 level on Friday, this week is shaping up to be a key week for the EUR as the European central bank meets on Thursday. Markets are weary of a stagflationary environment with supply chain disruptions on one side, which continue to weigh on economic growth, and skyrocketing energy prices on the other side, which continues to keep inflation running high.

This context makes Thursdays ECB meeting interesting. The market is pricing a 10 basis point increase next year, as inflation expectations are finally moving higher however the concern for the ECB will be that these inflation expectations are being predominantly driven by the skyrocketing energy prices, and are not aligned with the economic growth outlook. This could lead the ECB to disappoint the market by playing down expectations of policy tightening in 2022. This would be a blow for the EUR and could see a decent sell-off.

Expected Ranges

AUD/USD: 0.7400 - 0.7550 ▲

AUD/EUR: 0.6370 - 0.6475 ▼

GBP/AUD: 1.8320 - 1.8500 ▲

AUD/NZD: 1.0400 - 1.0500 ▲

AUD/CAD: 0.9190 - 0.9280 ▲

Author

OzForex Research

OzForex Foreign Exchange

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.