|

AUD/USD on-guard with key RBA speakers this week and trade deal sentiment

  • AUD/USD is a toss-up between the dovish RBA and positive trade deal headlines.
  • Technical indicators in the mentioned chart have pared their declines.

AUD/USD ended on Friday around where it started the day, around 0.6780 and had ranged between a high of 0.6803 and 0.6780. The US dollar was firm into the close in New York and took out the positives that came from bullish trade deal headlines. 

Financial markets were more buoyed going into the weekend as investors weighed the series of positive manufacturing data as the week drew to a close, indicating to markets that the sluggishness in global manufacturing may have started to peter out. 

US data improves and boosts the dollar

Markit US PMI figures rebounded and bat expectations for November. US Manufacturing PMI climbed from October's 51.3 to 52.2 in November, which was a seven month high and the third successive rise in the index. Meanwhile, the composite and services PMI data also impressed by rising to 51.9 and 51.6 respectively. The data boosted the US dollar which moved higher across the board of major currencies. The DXY ended Friday + 0.31% and cruised through 98 the figure to score a high of 98.31 vs a low of 97.84. 

Conflicting trade deal headlines keep AUD under pressure

Meanwhile, the Aussie has been caught in the crossfire of conflicting news flows around the Sino-American trade negotiations. However, the latest developments are a touch more positive and perhaps that US dollar can give back some ground to allow AUD/USD to penetrate into the slightly more bullish territory at the start of this week – The confluence of the 21-day and 50-day moving averages is located just through 0.68 the figure at 0.6830 as a compelling target for the bulls. President Donald Trump said a 'phase-one deal is 'potentially very close' and if it had not been for positive US data, the Aussie would have surely found some traction on such headlines. 

A case for the downside on dovish RBA

On the other hand, the Aussie will have a hard time of upside conviction in the wake of the latest jobs report which only goes to support speculations that the Reserve Bank of Australia will be back to cutting rates in the months ahead - 'Currently, the OIS curve is displaying a 21% implied probability of a cut in December and a 62% in the following meeting in February," analysts at ING Bank explained, noting  two scheduled RBA speakers next week:

"First, Deputy Governor Debelle will give a speech about the labour market (a hot topic, given recent upward dynamics in unemployment), on Tuesday (Monday night GMT). The following day, Governor Lowe will discuss unconventional monetary policy at a dinner in Sydney," adding, "Market’s high sensitivity to this prospect suggests we may see speculation about more RBA easing mounting next week, which should keep AUD below 0.68, barring any major breakthrough in trade negotiations."

AUD/USD levels

"The AUD/USD pair is bearish according to the daily chart, as selling interest surged on an approach to a bearish 100 DMA, which capped the upside throughout the week," Valeria Bednarik, the Chief analyst at FXStreet explained:

"Technical indicators in the mentioned chart have pared their declines, but remain well into negative territory, in line with further slides ahead. Shorter-term, and according to the 4-hour chart, the risk is also skewed to the downside as a bearish 20 SMA contained advances, while technical indicators hold directionless within negative levels."

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

More from Ross J Burland
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD climbs toward 1.1800 as US employment data weighs on USD

EUR/USD gains traction and rises toward 1.1800 in the second half of the day on Tuesday. The US Dollar weakens and helps the pair stretch higher after the employment report showed that Nonfarm Payrolls declined by 105,000 in October before rising by 64,000 in November.

GBP/USD clings to gains above 1.3400

GBP/USD stays in positive territory above 1.3400 on Tuesday. The British Pound benefits from upbeat PMI data, while the US Dollar struggles to find demand following the mixed employment figures, allowing the pair to hold its ground.

Gold recovers to $4,300 area as markets assess US jobs data

Gold reverses its direction and recovers to the $4,300 area after spending the first half of the day under bearish pressure. The renewed US Dollar weakness after the jobs report showed that the Unemployment Rate climbed to 4.6% in November helps XAU/USD erase its losses.

US Nonfarm Payrolls expected to point to cooling labor market in November

The United States Bureau of Labor Statistics will release the delayed Nonfarm Payrolls (NFP) data for October and November on Tuesday at 13:30 GMT. Economists expect Nonfarm Payrolls to rise by 40,000 in November. The Unemployment Rate is likely to remain unchanged at 4.4% during the same period.

Ukraine-Russia in the spotlight once again

Since the start of the week, gold’s price has moved lower, but has yet to erase the gains made last week. In today’s report we intend to focus on the newest round of peace talks between Russia and Ukraine, whilst noting the release of the US Employment data later on day and end our report with an update in regards to the tensions brewing in Venezuela.

BNB Price Forecast: BNB slips below $855 as bearish on-chain signals and momentum indicators turn negative

BNB, formerly known as Binance Coin, continues to trade down around $855 at the time of writing on Tuesday, after a slight decline the previous day. Bearish sentiment further strengthens as BNB’s on-chain and derivatives data show rising retail activity.