- AUD/USD consolidates the post-Fed rally while markets now await tariff news.
- AUD/USD pair is trading bullish according to intraday technical readings.
AUD/USD has morphed into a consolidation of the rally from 0.68 the figure to post-Fed's Powell comment 0.6888 high. AUD is currently trading at 0.6879 from a low of 0.6867 in Asia.
AUD/USD was the outperformer overnight with a steady drift higher throughout London to 0.6867 when the FOMC statement was digested and then further on the back of the presser where Federal Reserve's Chairman, Jerome Powell, dropped the bomb by doubling down on his opinion that inflation would have to be 'significantly' and 'persistently' higher before Fed rates could be moved up again.
Key takeaways from FOMC statement and projections
- The market has priced in virtually no chance of rate move through February.
- IOER 1.55% vs 1.55% prior.
- Fed drops language about ‘uncertainties about this outlook remain’.
- Vote was unanimous.
- “The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate”.
- No changes in the economic outlook paragraph.
- Says “the current stance of monetary policy is appropriate”.
- Leaves forecasts for GDP and inflation unchanged, lowers unemployment.
- Median forecast is for one rate hike in 2021 and one in 2022.
Elsewhere, the US November Consumer Price Index climbed 0.3% (vs 0.2% expected), with the core up 0.2% (as expected). the aggregated took the annual pace to 2.1% (vs previous at 1.8%), and 2.3% core. However, this had little bearing on the markets awaiting further news on tariffs and the Fed.
On tariffs, in recent trade, we have very little to go on and its a waiting situation as US President Donald Trump will meet with top advisors today and likely make a subsequent decision to either 'twist or hold' in what will be very crucial gameplay – more on that here
Valeria Bednarik, the Chief analyst at FXStreet explained that the AUD/USD pair is trading bullish according to intraday technical readings:
"It’s firmly above the 61.8% retracement of the November decline, the immediate support at 0.6865. In the 4-hour chart, technical indicators maintain their bullish slopes in overbought levels, while the price is well above all of its moving averages, which remain directionless. The immediate resistance is 0.6900, while a more relevant one comes at 0.6930, October 31st high."
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