AUD/USD: risk sentiment weighs on Aussie, commodities soured despite weaker greenback


  • AUD/USD has been unable to get above the key 0.7130, yesterday's R1 level, and has since drifted back to test below the pivot, marking a low of 0.7086 so far.
  • AUD/USD lower despite that the DXY has been scaling back its advance on the leader's board and trend back below the key 95.60/70 region. 

DXY is currently trading down in the 95.40s and the CRB index has yet to capitalise on this breakdown in the dollar. The CRB index has fallen from space on the 201 handle and down to 198. WTI, a major contributor to the index is bleeding as economists deem Hurricane Michael a ‘non-event for oil’ production while EIA lift forecasts on oil prices. At the same time, risk is not favourable today with the Dow falling 500 points and the S&P 500 risking its longest losing streak in around 2 years -  The VIX spiked and is sat at 18.32 currently, +2.37, (+14.86%)  - As a result, USD/JPY keeps bleeding and AUD/JPY is dipping its toe in the waters of the supportive pivots having already pierced S1 by some margin with a low of 79.85. 

Risk factors to be considered

There are a number of risk fundamentals at play and according to the IMF, global financial stability risks rising with trade tensions. This fresh admonishment from the lender of last resort comes after they recently cut the global growth forecast from 3.9% to 3.7%  - We had Christine Laggard giving us this heads up last week and it is the first time any recognised body has been prepared to officially mark the trade tensions as a threat to global growth - (Trump said recently that China is not ready to reach a trade deal) - Eyes are firmly on China with this regard and with the CSI 300 index in free fall, this could be contagious when it comes to global equity performances into the end of the year - 3,200 is the level to watch and we are not far from it - A break below 3,200 and a subsequent test of the week commencing 10th Sep lows at 3,191 could be menacing for the Aussie, the Yuan and risk in general. 

Day and data ahead

US: September PPI poses downside risk to CPI report - Nomura

Meanwhile, for the rest of this week, the US CPI data is the key focus with one last Fed speaker, Bostic, later today before the release. We will also hear from RBA's Assistant gov Ellis later around the same time this afternoon. Domestically we also have consumer inflation expectations tonight. 

Fed's Evans: National economy is doing 'extremely well'

  • AtlantaFed GDPNow  up slightly to 4.2%

With respect to the CPI print, analysts at TD Securities said, "We think rate market risks are skewed more to a disappointment given the move higher in rates in recent days. The curve should reverse its recent steepening move on a stronger print". Regarding FX, the analysts are neutral on the USD, "... but will take its cue from the Treasury space... Likely more vulnerable to a data miss given saturated USD longs." The data is expected 0.2% m/m, 2.4% y/y for the headlined and 0.2% m/m, 2.3% y/y for Core CPI. 

AUD/USD levels

AUD/USD Technical Analysis: Aussie bulls might have more fuel in the tank to drive the market up to 0.7200 target

Analysts at Commerzbank note that AUD/USD has recently seen a minor break to a new low:

"This has been accompanied by a TD perfected set up and we note TD support at 0.6995. This was a warning sign and we are now seeing a small rebound near term. The market will find strong resistance at the 55-day moving average at 0.7227 and the 0.7320 2018 channel and remains under pressure. Below 0.6995/75 targets 0.6827 the 2016 low."

Share: Feed news

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


Recommended content

Editors’ Picks

AUD/USD recovers above 0.6750 after Australian jobs data

AUD/USD recovers above 0.6750 after Australian jobs data

AUD/USD picks up a late bid and recovers above 0.6750 in Asian trading on Thursday, following the release of mixed Australian employment data. The extended post-Fed US Dollar recovery, amid a cautious market mood, could limit the pair's upside ahead of US data. 

AUD/USD News
USD.JPY jumps toward 144.00 on the road to recovery

USD.JPY jumps toward 144.00 on the road to recovery

USD/JPY gains traction and approaches 144.00 in Thursday's Asian session. The uptick of the pair is bolstered by the impressive US Dollar recovery. Investors shift their attention to the US data and the Bank of Japan interest rate decision on Friday. 

USD/JPY News
Gold price remains on the defensive amid the post-FOMC USD recovery from YTD low

Gold price remains on the defensive amid the post-FOMC USD recovery from YTD low

Gold price struggles to lure buyers despite the Fed’s jumbo interest rate cut on Wednesday. A further recovery in the US bond yields underpins the USD and caps the non-yielding metal. Concerns about an economic slowdown, along with geopolitical risks, help limit the downside.

Gold News
Ethereum attempts recovery following first rate cut in four years

Ethereum attempts recovery following first rate cut in four years

Ethereum is trading above $2,330 on Wednesday as the market is recovering following the Federal Reserve's decision to cut interest rates by 50 basis points. Meanwhile, Ethereum exchange-traded funds recorded $15.1 million in outflows.

Read more
Australian Unemployment Rate expected to hold steady at 4.2% in August

Australian Unemployment Rate expected to hold steady at 4.2% in August

The Australian Bureau of Statistics will release the monthly employment report at 1:30 GMT on Thursday. The country is expected to have added 25K new positions in August, while the Unemployment Rate is foreseen to remain steady at 4.2%.

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Forex MAJORS

Cryptocurrencies

Signatures