AUD/USD meanders at around 0.6950s, ahead of Australian Retail Sales

The Australian dollar is snapping three consecutive days of losses against the greenback despite being weighed by negative China’s economic data, which showed that exports slowed to their weakest in almost two years as the zero-tolerance policy halted factory production. At 0.6952, the AUD/USD is recovering some ground on Tuesday.

Late in the North American session, market sentiment shifted negative, except for the Nasdaq 100. The Federal Reserve tightening as it is struggling at inflation four times its target, China’s Covid-19 crisis, and the Ukraine-Russia war weigh on market mood, consequently affecting risk-sensitive currencies like the Australian dollar.

Fed speakers dominate Tuesday’s headlines

The Fed parade continued with New York Fed John Williams, Richmond’s Thomas Barkin and Cleveland’s Loretta Mester on Tuesday. They all agreed on 50-bps increases in the June and July meetings, while Mester added that the Fed would not rule out 75-bps hikes if needed.

As of writing, Fed Governor Christopher Waller was crossing the wires and said that inflation is too high and it’s the Fed’s job to get it down. He favors front loading rates and emphasized that this is the time to hit it with rate increases because the economy can take it.

On Monday, reports from China showed that its exports decelerated to their weakest level in nearly two years, as Covid-19 related restrictions halted factory production and hurt domestic demand. Late in the week, the Chinese Inflation Rate and prices paid by producers will shed some light on a possible “stagflation” scenario in the second-largest economy in the world.

In the meantime, the Australian docket, featured in the Asian session, Retail Sales and Business Confidence, thought did not lift the AUD/USD above the 0.7000 figure. The former came in line with the 1.6% foreseen, while Business Confidence down ticked from 12 to 10. Later in the session, at around 12:30 GMT, the Westpac Consumer Confidence is estimated to fall from the previous month 95.7 to 94.7.

Meanwhile, the US economic docket would feature additional Fed speakers; Neil Kashkari, the next one crossing the wires. Data-wise, US inflation figures will be unveiled on Wednesday, followed by prices paid by producers on Thursday and Consumer Sentiment on Friday.

AUD/USD Price Forecast: Technical outlook

From a daily chart perspective, the AUD/USD remains downward pressured. The MACD is aiming downwards, further confirming the aforementioned, as AUD/USD bears target the 0.6500 price level.

The AUD/USD first support would be 0.6900. A breach of the latter would expose June 2020  swing low at around 0.6776. Once cleared, it would expose the May 2020 swing highs around 0.6616, followed by the 0.6500 mark.