- AUD/USD prints mild losses after refreshing three-month high.
- Market sentiment worsens amid an absence of US stimulus deal.
- Softer US GDP, ECB announcements dragged down USD despite firmer Treasury yields.
- Australia Q3 PPI, Retail Sales for September can direct immediate moves ahead of US Core PCE Inflation data.
AUD/USD struggles to extend the four-day uptrend around the highest levels since July, down 0.11% intraday around 0.7535 during Friday’s initial Asian session. In doing so, the quote portrays a cautious mood in the market ahead of the key Aussie and the US data.
In addition to the cautious mood ahead of Australia’s third-quarter (Q3) Producer Price Index (PPI) and September’s Retail Sales, an absence of a deal on the US President Joe Biden’s $1.75 trillion stimulus package also weigh on the market sentiment and the AUD/USD prices. On Thursday, US Democrats discussed details of President Biden’s infrastructure plan but some on the floor reject voting on the package unless getting final blueprints, delaying the vote to the next week.
Elsewhere, fresh chatters over inflation and firmer monetary policies also sour the sentiment. Although the US Q3 GDP’s weakness hints at the Fed’s slower rush towards monetary policy tightening, inflation expectations remain near a multi-year high in the US and Eurozone, which in turn joins the covid-led supply crunch to push policymakers towards tightening. Hence, the fears of the Fed calling an end to the easy money loom and challenge AUD/USD prices.
During the previous day, the US Dollar Index (DXY) dropped the most since October 13 after the US Q3 GDP US Q3 GDP slipped below 2.7% forecast to 2.0%, much lower than 6.7% prior. Also, the European Central Bank’s (ECB) hint to start tapering the monthly bond purchases and the PEPP (that’s the pandemic emergency purchase program) will end next March propelled the Euro and weighed down the USD. The regional central bank left monetary policy unchanged, as expected, with refinancing rate at 0.0% and deposit rates at -0.5%.
Amid these plays, the S&P 500 Futures print mild losses after the Wall Street benchmark closed positive, exerting additional downside pressure on the AUD/USD prices.
Given the anticipated QoQ weakness in the PPI, from 0.7% to 0.3%, contrasting the strong YoY expectations of 3.2% versus 2.2% prior, the Reserve Bank of Australia (RBA) may not gain much information about the factory gate inflation. Hence, the data may offer little direction to the AUD/USD prices. However, an anticipated jump in the Aussie Retail Sales, from -1.7% to +0.2% for September may hint at a further tightening of the monetary policy and rate hikes after the early week’s firmer inflation numbers, which in turn could help the quote poke July’s high of 0.7599 on positive release.
Following the Aussie data, Fed's preferred inflation gauge, namely Core Personal Consumption Expenditures (PCE) - Price Index for September will be in focus.
AUD/USD grinds higher around July top amid sluggish Momentum line. However, the Aussie pair confirmed the bullish pennant and hence kept the buyers hopeful of revisiting the June high surrounding 0.7775 on the previous day’s sustained break of 0.7535. However, tops marked during late June around 0.7620 may offer an intermediate halt during the rally.
In a case where the bears sneak in, a downside break of the pennant’s support line, at 0.7485 by the press time, a convergence of the 100-SMA and monthly support line near 0.7420 will be eyed for further weakness.
Additional important levels
|Today last price||0.7538|
|Today Daily Change||0.0021|
|Today Daily Change %||0.28%|
|Today daily open||0.7517|
|Previous Daily High||0.7537|
|Previous Daily Low||0.7486|
|Previous Weekly High||0.7547|
|Previous Weekly Low||0.7378|
|Previous Monthly High||0.7478|
|Previous Monthly Low||0.717|
|Daily Fibonacci 38.2%||0.7518|
|Daily Fibonacci 61.8%||0.7506|
|Daily Pivot Point S1||0.749|
|Daily Pivot Point S2||0.7463|
|Daily Pivot Point S3||0.7439|
|Daily Pivot Point R1||0.754|
|Daily Pivot Point R2||0.7564|
|Daily Pivot Point R3||0.7591|
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.