AUD/USD, coiled and it gives us plenty of risk events this week, including the RBA


  • AUD/USD traders get set for a busy week. 
  • The RBA, NFP and Fed chair will be the main focus. 

The Australian dollar is taking its cues from sentiment surrounding the Federal Reserve, robust US data, local economic data and while also looking to China's upcoming parliament meeting for new economic support.

The Aussie is correcting higher and away from the January low of 0.6689 in the footsteps of the return of risk appetite. Markets got a boost last week on the back of comments by Atlanta Fed President Raphael Bostic. The central banker said on Thursday that the impact of higher US interest rates on the economy may only begin to "bite" in earnest this spring. Earlier that day, US data, however, pointed to a still strong U.S. jobs market ahead of this week's Nonfarm Payrolls and Federal Reserve chairman Jerome Powell's testimony. 

A number of regional Fed Presidents have expressed their openness to increasing the amplitude of rate hikes from 25bp to 50bp if the data warrants so markets will be looking to Powell for confirmation and a hint of a bias this week one way or another. 

''Powell may be questioned on this at his testimony; if so he is likely to reiterate that the absolute level of rates is ultimately what matters,'' analysts at ANZ Bank said. ''The text of the semi-annual report was released on Friday and noted that further interest rate rises will be appropriate and that a period of below-trend growth may be needed to get inflation back to 2.0%.''

However, the analysts also argued that ''the recent jobs and inflation data do not support arguments that interest rates are restrictive and it will be important to scrutinize the next round of hard data, starting with non-farm payrolls this Friday. ''

Analysts at TD Securities said that ''US payrolls likely mean-reverted to a still firm pace in Feb after an unexpected 517k surge in Jan. We also look for the Unemployment Rate rate to stay unchanged at 3.4%, and wage growth to print a strong 0.4% MoM.'' It is worth noting that the range of economists’ estimates is 100-325k.

China's annual parliament session

Meanwhile, the focus is now turning to China's annual parliament session where it set its economic goals for the year and unveiled fresh policy support to consolidate an economic recovery following the removal of stringent COVID-19 curbs. China’s National People’s Congress (NPC) has kicked off its annual parliamentary session by announcing a modest target for economic growth of about 5 percent. The session is lso set to hand President Xi Jinping a third term in office and implement the biggest government shake-up in a decade. “Global inflation remains high, global economic and trade growth is losing steam, and external attempts to suppress and contain China is escalating,” outgoing Premier Li Keqiang said during his speech to open the parliament, which will run through March 13.

All eyes on the RBA

The focus will be on whether the Reserve Bank of Australia softens its language in light of recent weaker data. ''On the back of the widening breadth and persistence of inflation, the cash rate in Australia remaining below comparable G10 economies, and the Australian economy more likely to benefit from China's reopening, we expect the RBA to push on with hikes in Apr and May,'' analysts at TD Securities said.

AUD/USD technical analysis

The price has been range bound within last week's opening range for the most part. A break of the upside opens risk to the next 100 pip box and 0.6920 above there. To the downside, a break of support op[ens risk to a test of the 0.6580s and then the 0.6520s.

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD recovers toward 1.0850 as risk mood improves

EUR/USD recovers toward 1.0850 as risk mood improves

EUR/USD gains traction and rises toward 1.0850 on Friday. The improvement seen in risk mood makes it difficult for the US Dollar (USD) to preserve its strength and helps the pair erase a portion of its weekly losses. 

EUR/USD News

GBP/USD stabilizes above 1.2700 after downbeat UK Retail Sales-led dip

GBP/USD stabilizes above 1.2700 after downbeat UK Retail Sales-led dip

GBP/USD staged a rebound and stabilized above 1.2700 after dropping to a weekly low below 1.2680 in the early European session in response to the disappointing UK Retail Sales data. The USD struggles to find demand on upbeat risk mood and allows the pair to hold its ground. 

GBP/USD News

Gold rebounds to $2,340 area, stays deep in red for the week

Gold rebounds to $2,340 area, stays deep in red for the week

Gold fell nearly 4% in the previous two trading days and touched its weakest level in two weeks below $2,330 on Thursday. As US Treasury bond yields stabilize on Friday, XAU/USD stages a correction toward $2,340 but remains on track to post large weekly losses.

Gold News

Dogecoin inspiration Kabosu dies, leaving legacy of $22.86 billion market cap meme coin behind

Dogecoin inspiration Kabosu dies, leaving legacy of $22.86 billion market cap meme coin behind

Kabosu, the popular Shiba Inu dog that inspired the logo of the largest meme coin by market capitalization, Dogecoin (DOGE), died early on Friday after losing her fight to leukemia and liver disease.

Read more

Week ahead – US PCE inflation and Eurozone CPI data enter the spotlight

Week ahead – US PCE inflation and Eurozone CPI data enter the spotlight

Dollar traders lock gaze on core PCE index. Eurozone CPIs in focus as June cut looms. Tokyo CPIs may complicate BoJ’s policy plans. Aussie awaits Australian CPIs and Chinese PMIs.

Read more

Forex MAJORS

Cryptocurrencies

Signatures