- DXY extends correction from 3-week tops.
- Lifted on a big beat on Aus consumer confidence.
- Rebound in gold and oil prices underpins.
- US CPI, FOMC decision on tap.
The AUD/USD pair extends its rebound from half-yearly lows into a fourth day today, on the back of upbeat Aus macro news and broad-based USD correction.
AUD/USD: DXY drops on US politics
The Aussie resumed its upmove in Asia, benefiting from a solid boost seen in the Australian consumer confidence data.
Consumer confidence surprised to the upside - Westpac
"The Westpac Melbourne Institute Index of Consumer Sentiment rose 3.6% to 103.3 in December from 99.7 in November."
Moreover, a reversal staged by the US dollar from 3-week tops reached against its main competitors, in response to the renewed US political risks, also added to latest leg higher in the spot.
Reuters reported that the Alabama Senate race saw a Democratic win, the first Democratic Senate win in the state since 1992. The outcome poses a big risk for the Republicans, who are headed for a re-election in 2018.
The major now flirts with yesterday’s high of 0.7580 levels, with the AUD bulls looking to regain 0.76 handle amid a recovery seen in gold and oil prices. Oil prices recover on the back of a big US crude drawdown news, while the yellow metal rebounds from 5-month lows amid fresh North Korean headlines and weaker Treasury yields.
All eyes now remain on the US CPI report and FOMC rate decision for fresh trading opportunities ahead of the Australian employment data due out tomorrow.
AUD/USD Preferred Strategy
According to Jim Langlands at FX Charts, “The short-term indicators are still mixed, but trading from the short side continues to be the plan ahead of the FOMC Meeting (Wed) although it may be prudent to wait to sell it given the positive look of the 4 hour charts. Overall though, with the US$ looking generally underpinned elsewhere, I suspect that further upside for the Aud will be limited and selling into rallies is still preferred, but leave room for another squeeze towards 0.7580 and even to 0.7600. On the downside, support will arrive at 0.7520, below which there will be plenty of work to do at 0.7500 and then again at 0.7470/80, which will be strong, so taking some profit on shorts, if/when we get there, and looking to resell into a rally may be a more medium-term plan.”
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
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.