- AUD/USD downside looks constructive.
- Tracking stocks, rates and the DXY ahead of the FOMC minutes.
AUD/USD picking up some offers here as we await the FOMC minutes and the DXY gains some traction, currently higher to +0.22% at 89.91 from a low of 89.70 in the day's range to 89.99 the high. Currently, AUD/USD is trading at 0.7916, up 0.08% on the day, having posted a daily high at 0.7922 and low at 0.7905.
AUD/USD has been on the backfoot since the recent highs of 0.7988 and with a break of the 0.7860 support, (now resistance), the case is constructive on the downside towards the 0.7800 level.
The Aussie wages data yesterday made for a spike to the 0.79 handle by 20 pips but the dollar's momentum took the glory away from the bulls in Asia and the downside was re-established on a break below 0.7880.
The US session so far ahead of the FOMC minutes
For today, eyes are on the FOMC minutes, Fed speakers, stock and yields. So far, the benchmarks got off to a good start, rallying from the off with the S&P rallying through the hourly MA's and the DJIA headed towards the 100 SMA in the same time frame. However, as the US 10-yrs were playing catch up, stocks stalled, AUD was lower and the DXY was back on track towards 90 again.
There had been some data releases from the US in Markit manufacturing PMI for Feb (Prelim) coming in better at 55.9 vs. the 55.5 expected. The employment index for US manufacturing was also improved at 55.8 versus 54.8 last month. Then, the existing home sales for January 5.38M vs. 5.60m expected.
We also heard from Fed's Kaplan who said that the Fed should raise rates gradually and patiently this year. Fed's Kashkari says they are not targeting FX to move the USD up or down and that higher market rates show optimism, adding that there is still some slack left in US labour market and that tax cuts could help Fed achieve 2% inflation target.
FOMC Minutes Preview: More hawkishness or the beginning of a Powell Put?
AUD/USD levels
Noting that AUD/USD has sold off following last weeks failure at the 61.8% retracement at 0.7991, analysts at Commerzbank explained that the pair is trading around the 55-day ma which guards the 200-day ma at 0.7775. "Only a move below 0.7743 (61.8% retracement) will target 0.7637/78.6% retracement and the 0.7568 2016-2018 uptrends," the analysts added.
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