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AUD/USD eyes to snap four-week uptrend around 0.6900 amid hawkish central bank talks, recession woes

  • AUD/USD stays pressured after two-day losing streak, braces for the first negative week in five.
  • Downbeat Aussie data, mixed statistics in the US keep recession woes on the table.
  • Policymakers at Fed, ECB defend hawkish bias while citing inflation fears.
  • Final round of Federal Reserve talks ahead of pre-meeting blackout appears crucial amid light calendar.

AUD/USD justifies its risk-barometer status, as well as bears the burden of downbeat statistics at home, as it holds lower ground near 0.6900 after declining for the last two consecutive days. In doing so, the Aussie pair braces for the first negative weekly closing in five while keeping the reversal from the highest levels since August.

On Thursday, Australia’s Consumer Inflation Expectations for January improved to 5.6% versus 5.2%. However, the employment numbers for December disappointed the AUD/USD pair traders afterward as the headline Employment Change turned negative on a seasonally adjusted basis, printing a -14.6K figure versus 22.5K expected and 64K prior. Further, the Unemployment Rate also rose to 3.5% compared to the market consensus of witnessing no change in the 3.4% previous readings.

On the other hand, US Unemployment Claims dropped to the lowest levels since late April 2022, to 190K for the week ended on January 13 versus 214K expected and 205K prior. Further, the Philadelphia Fed Manufacturing Survey Index improved to -8.9 for January compared to -11.0 market forecasts and -13.7 previous readings. Alternatively, US Building Permits eased in December to 1.33M MoM versus 1.37M consensus and 1.351M prior while the Housing Starts also dropped to 1.382M during the stated month from 1.401M in November, versus 1.359M expected.

It’s worth noting that the downbeat US Retail Sales and Producer Price Index (PPI) raised fears of an economic slowdown in the world’s largest economy after the softer wage growth and activity data flashed earlier.

Elsewhere, Federal Reserve Vice Chair Lael Brainard said that it will take time and resolve to get high inflation down to the fed's 2% target. The policymaker also added, “The policy will need to be sufficiently restrictive for some time.” On the same line, Boston Fed President Collins signaled that the baseline remains that the effective fed funds rate should settle slightly above 5.0%, implying three more 25bp rate rises. The same view was shared by most Fed speakers as they sneak into the pre-FOMC blackout period from this Saturday.

Amid these plays, Wall Street closed negative while the yields bounced off multi-day low but the US Dollar struggled to improve.

Moving on, a lack of major data/events highlights Fedspeak as the key catalyst.

Technical analysis

Rising wedge confirmation favors the AUD/USD bears. That said, the monthly support line near 0.6835 appears the immediate target for sellers.

Additional important levels

Overview
Today last price0.691
Today Daily Change-0.0026
Today Daily Change %-0.37%
Today daily open0.6936
 
Trends
Daily SMA200.6835
Daily SMA500.6769
Daily SMA1000.6638
Daily SMA2000.6824
 
Levels
Previous Daily High0.7064
Previous Daily Low0.6936
Previous Weekly High0.6994
Previous Weekly Low0.686
Previous Monthly High0.6893
Previous Monthly Low0.6629
Daily Fibonacci 38.2%0.6985
Daily Fibonacci 61.8%0.7015
Daily Pivot Point S10.6893
Daily Pivot Point S20.685
Daily Pivot Point S30.6765
Daily Pivot Point R10.7022
Daily Pivot Point R20.7107
Daily Pivot Point R30.715

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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