AUD/USD eases from highs to 0.7170 as USD rebounds on FOMC minutes

FOMC says rate hikes may be needed in 2019 if economy evolves as expected.
USD stages modest recovery on FOMC's relatively hawkish tone.
Coming up: Australian labour market data.

Eren Sengezer FXStreet

After rising to its highest level in two weeks at 0.7183, the AUD/USD pair erased its daily gains and turned flat on the day near 0.7160 before rising modestly in the last minutes. As of writing, the pair was trading at 0.7172, adding 0.12% on a daily basis.

In the minutes of its January 29-30 meeting, the FOMC said that several participants saw further rate hikes appropriate in 2019 if the economy evolved as expected. Regarding the balance sheet reduction, "Almost all participants thought it would be desirable to announce plan to stop reducing balance sheet later this year. " the FOMC noted. "Many policymakers suggested that some further very gradual decline in average level of reserves could be appropriate."

Although the FOMC's publication didn't necessarily offer anything that wasn't already mentioned before, the greenback started to recover its daily losses with the US Dollar Index advancing to 96.50 area.

In the early Asian session, the Australian Bureau of Statistics will release the January labour market report, which is expected to show an increase of 15K in the number of employed. Previewing the data, "January is seasonally a weak month for employment as seasonal jobs are no longer required, but this is adequately captured by the seasonal adjustment process. We look for +20k jobs for January, and with an unchanged participation rate of 65.6% leaves the unemployment rate at 5.0% (mkt +15k and +5.0%)," said TD Securities analysts.

Technical outlook by FXStreet Chief Analyst Valeria Bednarik

Ahead of the Asian opening, the pair is trading unchanged daily basis, holding above its moving averages in the 4 hours chart, with the 20 SMA gaining upward traction at around 0.7145, providing an immediate short-term support. The Momentum indicator in the mentioned chart offers a neutral stance, heading nowhere around its mid-line, while the RSI is also lifeless but around 59, all of which suggests a limited bearish scope at the time being.

Support levels: 0.7150 - 0.7110 - 0.7070.

Resistance levels: 0.7190 - 0.7235 - 0.7260.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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