|

AUD/USD bulls run into offers near 0.6700 with mixed Fed bets

  • AUD/USD bulls come up to meet resistance near 0.6700. 
  • Fed and RBA bets are driving AUD back and forth amid uncertainty. 

AUD/USD is a touch higher by some 0.2% on Tuesday after rising from a low of 0.6631 and reaching a high of 0.6696 at the start of the New York session. Bulls are in play despite softer Aussie data and the subsequent heightened dovish speculation with regard to the Reserve Bank of Australia. Instead, risk sentiment has improved, (AUD proxy) as Federal Reserve odds have moved in favor of a slower path of rate hikes amid the banking sector troubles. 

US CPI keeps Fed rate hike odds alive

The combination is neutral for the Aussie but there is a bearish bias in the US Dollar for the meanwhile as investors tread cautiously ahead of next week´s Federal Open Market Committee meeting. The US Consumer Price Index (CPI) rose 0.4% last month after accelerating 0.5% in January. In the 12 months through February, the CPI increased by 6.0%, a slower pace than the 6.4% annualized gain in January, however, this was still above the Federal Reserve's 2% target, as such, the US Dollar found some demand on the data and printed the session high in the US but it has since turned lower while futures priced in a Fed rate cut by year's end.

Federal Reserve observers are mixed on whether the still solid rise in inflation will push the Fed to raise rates again next week after the collapse of Silicon Valley Bank and Signature Bank caused turmoil in financial markets. Markets are in anticipation of a terminal rate of 4.45% for December, down from more than 5% last week. Fed funds futures also reveal a change in sentiment with regard to this month's FOMC meeting. However, the CME´s Fed Watch Tool shows a 28.4% likelihood the Fed would stand pat at the end of its two-day policy meeting on March 22, slightly down from the prior day following the CPI data. 

RBA dovish bets accumulating

Meanwhile, domestically, net AUD short positions have moved moderately lower between February 7 and February 21, analysts at Rabobank noted. ´´More recently, the Reserve Bank of Australia, RBA, has indicated that a pause in policy may be on the horizon, though further tightening is expected first.´´ 

In this regard, the recent NAB February business survey revealed a fall in business confidence though conditions remained similar to January. RBA Governor Lowe has stated that this is 1 of the 4 data points (i.e., jobs, retail sales, business survey, and inflation) the Bank is closely watching for its policy decision in April. This NAB print suggests business activity is softening and this is a dovish input that implies a potential pause by the RBA. ´´However, we think the Feb Jobs Report released this Thurs is more crucial to the Bank given the Governor's emphasis on preserving job gains,´´ analysts at TD Securities argued. 

The analysts said that this will be one of the most closely watched employment prints in a long time. ´´The larger-than-usual increase in under-employed people in Jan, and the larger-than-usual rise in the number of unemployed people who had a job to go to in the future suggests a bounce is likely,´´ the analysts said who forecast 47k jobs were added in Feb, the participation rate rising to 66.6%, keeping the Unemployment Rate rate unchanged at 3.7%.

AUD/USD

Overview
Today last price0.6686
Today Daily Change0.0019
Today Daily Change %0.28
Today daily open0.6667
 
Trends
Daily SMA200.6762
Daily SMA500.6882
Daily SMA1000.6768
Daily SMA2000.6775
 
Levels
Previous Daily High0.6717
Previous Daily Low0.6579
Previous Weekly High0.677
Previous Weekly Low0.6564
Previous Monthly High0.7158
Previous Monthly Low0.6698
Daily Fibonacci 38.2%0.6664
Daily Fibonacci 61.8%0.6632
Daily Pivot Point S10.6592
Daily Pivot Point S20.6516
Daily Pivot Point S30.6454
Daily Pivot Point R10.673
Daily Pivot Point R20.6792
Daily Pivot Point R30.6868

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

More from Ross J Burland
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD declines toward 1.1700 on solid USD recovery

EUR/USD turns south and declines toward 1.1700 on Wednesday. A solid comeback staged by the US Dollar weighs heavily on the pair, as traders look to USD short covering ahead of US CPI on Thursday. However, the downside could be capped by hawkish ECB expectations. 

GBP/USD slides toward 1.3300 after softer-than-expected UK inflation data

GBP/USD has come under intense selling pressure, eyeing 1.3300 in the European session on Wednesday. The UK annual headline and core CPI rose by 3.2% each, missing estimates of 3.5% and 3.4%, respectively, reaffirming dovish BoE expectations and smashing the Pound Sterling across the board. 

Gold clings to modest gains above $4,300

Following Tuesday's volatile action, Gold regains its traction on Wednesday and trades in positive territory above $4,300. While the buildup in the USD recovery momentum caps XAU/USD's upside, the cautious market stance helps ithe pair hold its ground.

Bitcoin, Ethereum and Ripple extend correction as bearish momentum builds

Bitcoin, Ethereum, and Ripple remain under pressure as the broader market continues its corrective phase into midweek. The weak price action of these top three cryptocurrencies by market capitalization suggests a deeper correction, as momentum indicators are beginning to tilt bearish.

Ukraine-Russia in the spotlight once again

Since the start of the week, gold’s price has moved lower, but has yet to erase the gains made last week. In today’s report we intend to focus on the newest round of peace talks between Russia and Ukraine, whilst noting the release of the US Employment data later on day and end our report with an update in regards to the tensions brewing in Venezuela.

AAVE slips below $186 as bearish signals outweigh the SEC investigation closure

Aave (AAVE) price continues its decline, trading below $186 at the time of writing on Wednesday after a rejection at the key resistance zone. Derivatives positioning and momentum indicators suggest that bearish forces still dominate in the near term.