- AUD/USD consolidates the previous weekly losses, retreats from intraday high of late.
- Easing Omicron fears join market’s preparation for hawkish Fed to underpin recent risk-on mood, yields, gold both print mild gains.
- Hawkish bets on RBA gain traction after the last week’s firmer Aussie data.
- Aussie PMIs came in softer, US Markit activity numbers for January in focus.
AUD/USD pares intraday gains around 0.7180, up 0.08% on a day, following an upbeat start to the key week during the early Asian session.
The Aussie pair initially ignored mixed Australia PMIs from Commonwealth Bank (CBA) as virus updates were positive. The recovery moves gained on firmer prices of gold afterward. However, pre-Fed fears and geopolitical tension surrounding Russia-Ukraine tensions recently weighed down the Aussie prices.
That said, preliminary readings of January CBA Manufacturing PMI eased to 55.3, below 55.9 forecast and 57.4 revised down prior readings whereas Services PMI slumped into contraction territory with 45 figure compared to 51.8 expected and 55.1 prior.
Elsewhere, Australia’s daily covid infections ease for the fifth consecutive day, to recently around 28,100. However, the death toll keeps climbing and challenge the optimists.
It’s worth noting that the US State Department and UK Deputy Prime Minister Dominic Raab both flashed warnings over Russia’s preparations for invading Ukraine, which in turn magnified geopolitical fears.
Amid these plays, the US 10-year Treasury yields rose 2.4 basis points (bps) to 1.77%, after posting the first weekly decline in five, whereas the S&P 500 Futures rise 0.50% while licking the previous week’s wounds amid the mostly quiet session.
“Last week we argued the RBA would end quantitative easing in February, despite the uncertainty caused by Omicron. With the December employment report confirming the economy finished 2021 with exceptional momentum, we are even more confident about that call. Given how the labor market finished 2021, an explicit decision to move to QT is likely on the table for the February meeting,” said ANZ.
That said, AUD/USD traders will pay attention to Tuesday’s Australia Consumer Price Index (CPI) for Q4, expected 1.0% versus 0.8% QoQ prior, for fresh impulse. However, Fed’s verdict on the March rate hike will be more important to follow.
Read: Fed Preview: Three ways Powell could out-dove markets, dealing a blow to the dollar
Technical analysis
Having registered multiple failures to cross the 100-DMA, AUD/USD dropped below an ascending support line from early December 2021, forming part of a two-month-old rising wedge bearish pattern.
Given the downbeat MACD and RSI conditions, bears do have upper hands and are likely to dominate on the clear break of 0.7170.
That said, the 0.7100 threshold will be imminent support for the AUD/USD sellers to watch following the 0.7170 breakdowns.
Alternatively, a clear upside break of the 100-DMA level surrounding 0.7280 isn’t a green card for the AUD/USD bulls as the previous support line from August and a descending trend line from May, respectively around 0.7350 and 0.7400, will challenge the further upside.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stabilizes near 1.0800 as trading action turns subdued
EUR/USD holds steady near 1.0800 on Thursday and remains on track to end the day in negative territory following upbeat macroeconomic data releases from the US. The action in financial markets turn subdued as trading volumes thin out heading into Easter holiday.
GBP/USD extends sideways grind above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth help the USD stay resilient against its rivals and limits the pair's upside.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.