AUD/USD reaches new five-month highs amid optimism, ignoring overbought conditions

AUD/USD is extending its gains above 0.70, hitting the highest since late July.
Optimism about the Chinese economy, US-Sino relations, and USD weakness are behind the move.
The next levels to watch are 0.7045 and 0.7075.

Yohay Elam FXStreet

Australians are among the first in the world to celebrate the new year – and some may find joy in the new cycle highs that AUD/USD reaches. At the time of writing, the Aussie hit a new high of 0.7013 against the dollar, last seen on July 28.

The US dollar is unwinding some of its gains of 2019 as money managers adjust their portfolios. Apart from end-of-year flows, the greenback is also sold off amid optimism that a Chinese delegation will sign a trade deal in Washington as soon as this weekend.

Moreover, the A$ is benefiting from an improvement in the Chinese economy. The official Purchasing Managers' Index for the manufacturing sector has advanced to 50.2 points, with encouraging components. China is Australia's No. 1 trade partner.

The US Conference Board Consumer Confidence and housing figures are of interest today. The statistics are released when Australians will already be in 2020.

AUD/USD Technical Analysis

The Relative Strength Index on the four-hour chart is well above 70 – indicating overbought conditions. Nevertheless, momentum is positive and the Simple Moving Averages are on the rise.

Resistance awaits at 0.7045 and 0.7075, which date back to July. The round number of 0.71 is the next level to watch.

Support is at 0.6940, which was a swing high in early December. It is followed by 0.6880, 0.6840, and 0.68.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

AUD/USD rejected at 0.70 as hot US CPI revived Fed hike threat

The Aussie Dollar ends Wednesday’s session with a 0.17% loss against the US Dollar, as high US inflation sent US yields higher amid expectations that the Federal Reserve may hike rates late this month. The AUD/USD trades at 0.6971 after hitting a high above 0.7000.

USD/JPY consolidates near 158.50; looks to US CPI for fresh impetus

USD/JPY stays range-bound near 158.50 in the Asian session on Wednesday, with looming intervention risks supporting the Japanese Yen and capping upside amid a softer US Dollar. However, geopolitical uncertainties act as a tailwind for the safe-haven USD and the pair. Traders also seem hesitant ahead of the release of the latest US inflation figures.

Gold remains offered below $4,100

Gold adds to the weekly bearish tone and slips back below the $4,100 mark per troy ounce on Wednesday. Indeed, the precious metal continues to suffer the stronger US Dollar and rising US Treasury yields as bets for extra tightening by the Fed remain on the rise following US inflation figures.

Australia Unemployment Rate forecast to remain at 4.6% in September

The Australian Bureau of Statistics will publish the September employment report on Thursday at 00:30 GMT. The Australian Dollar could see a big reaction to the jobs data if the numbers significantly alter market expectations for another interest rate hike by the Reserve Bank of Australia later this year.

Ethereum falls below $2,500 as hot CPI raises Fed hike odds

Ethereum extended its decline below $2,500 on Wednesday after a hotter-than-expected US inflation print renewed selling across the crypto market. At the time of writing, the top altcoin trades near $2,430, down 3.1% in the past 24 hours. The US Consumer Price Index for September rose 0.6% monthly, in line with market forecasts and up from a 0.4% increase in August.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?