• The Australian dollar advances for the fourth straight day.
  • A risk-off market mood could not stop the rally of the AUD, courtesy of broad US dollar weakness.
  • Market participants mainly ignored mixed US macroeconomic data.

The Australian dollar advances as the New York session ends approaches up some 0.08%, courtesy of the continuing US dollar sell-off spurred by hot US consumer inflation. At the time of writing, the AUD/USD exchanges hands at 0.7290. The market sentiment is downbeat, as portrayed by global equities falling. In the FX market, risk-sensitive currencies. Retreats some, but broad US dollar weakness capped the AUD fall.

US Jobless Claims increased though the PPI slowed a tick

Latest developments in the US keep AUD/USD traders leaning on the dynamics of its economy. The US macroeconomic docket showed that Initial Jobless Claims for the week ending on January 7 rose 230K, higher than the 200K estimated by analysts, while prices paid for producers in December, also called PPI, decelerated, came at 9.7%, a tenth lower of the 9.8% foreseen.

Fed and RBA divergence

Fundamentally speaking, nothing has changed. The Federal Reserve would raise rates at least three times, presumably beginning in March. Fed speakers through the week, led by Chief Powell, and Vice-Chair nominee Lael Brainard, said that a rate hike is possible in March and would like to reduce the balance sheet the sooner, the better. The Fed speakers who expressed those views were: Regional Fed’s Presidents Bostic, Daly, Mester, and Barkin.

Putting the Fed aside, the Reserve Bank of Australia (RBA) keeps its dovish stance in place. Additionally, as noted in the RBA’s last monetary policy minutes, the Australian central bank said it would maintain highly supportive monetary policy conditions, and the board would be patient. The RBA noted that inflation increased but remained low, compared with other economies, like the US and the UK. 

Therefore, the central bank divergence favors the US Dollar. However, extreme USD longs positioning could have been caught off guard, spurring the unwind of some of those greenback longs, weakening the USD.

AUD/USD

Overview
Today last price 0.7289
Today Daily Change -0.0001
Today Daily Change % -0.01
Today daily open 0.729
 
Trends
Daily SMA20 0.7209
Daily SMA50 0.7213
Daily SMA100 0.7287
Daily SMA200 0.7429
 
Levels
Previous Daily High 0.7293
Previous Daily Low 0.72
Previous Weekly High 0.7278
Previous Weekly Low 0.713
Previous Monthly High 0.7278
Previous Monthly Low 0.6993
Daily Fibonacci 38.2% 0.7257
Daily Fibonacci 61.8% 0.7235
Daily Pivot Point S1 0.7228
Daily Pivot Point S2 0.7167
Daily Pivot Point S3 0.7135
Daily Pivot Point R1 0.7322
Daily Pivot Point R2 0.7354
Daily Pivot Point R3 0.7415

 

 

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