AUD/USD plunges below 0.7000 on upbeat US Retail Sales, soft Aussie Wages, FOMC minutes eyed

AUD/USD tumbles below the 20/50-day EMA on Wednesday, on a risk-off impulse spurred by recession fears lingering on investors’ minds, while US Retail Sales crushed expectations on a yearly basis, ahead of the release of July’s FOMC monetary policy minutes. At the time of writing, the AUD/USD is trading at 0.6915.

Global bourses reflect the deterioration in sentiment. A report by the US Department of Commerce revealed that Retail Sales for July finished flat at 0% on a monthly basis, missing estimates of 0.1%, undermined by declines in auto purchases and gas prices. Compared to one year before, sales rose by 10.3%, higher than the 8.3% estimates. 

Even though the news was positive, traders’ reaction was muted, as they remained focused on the July FOMC minutes.

Another factor weighing on the AUD/USD is the greenback strength, with the US Dollar Index, a gauge of the buck’s value against a basket of six peers, advancing 0.22% at 106.708. Further, Iron Ore prices drop 1.73% to $105.51 a ton, down from the August peak at $114.31.

Meanwhile, in the Asian session, the Australia Wage Price Index increased less than estimations, so traders priced in less aggressive rate hikes by the RBA, a headwind for the Aussie, which tumbled from 0.7026 daily highs below the 0.7000 figure. The quarter-on-quarter figure rose 0.7%, less than 0.8% expected, while on a yearly basis, it jumped 2.6%, lower than 2.7%.

What to watch

The US economic docket will feature the FOMC minutes release alongside Fed’s Governor Michell Bowman, crossing newswires on Wednesday. In the Australian calendar, traders will get cues from employment data.

Also read: Australian Employment Preview: Forecasts from four major banks, solid job creation

AUD/USD Price Analysis: Technical outlook

In the last three days, AUD/USD’s price action witnessed a fall of almost 3%, from monthly highs reached at 0.7136. Losses extended below the 100, 50, and 20-day EMAs, with sellers aggressively in charge. Further confirmation of the previously mentioned is the Relative Strength Index (RSI)  with a steeper fall from 64.39, below the 50-midline, but with enough room to spare before reaching oversold conditions. Therefore, the AUD/USD next support will be the 0.6900 figure. Once cleared, it will expose crucial support levels, at 0.6869 August 5 low, followed by the YTD low at 0.6681.