|

AUD/USD sellers keep the reins at three-week low near 0.6600 ahead of Australia Retail Sales

  • AUD/USD licks its wounds at the lowest levels in three weeks after falling the most since early March.
  • Disappointing Australia inflation, hawkish Fed comments and China concerns weigh on Aussie pair.
  • Australia Retail Sales for May, mid-tier US data eyed for clear directions.

AUD/USD bears take a breather at the lowest levels since June 05, after posting the biggest daily loss in more than three months, as traders await Australia’s Retail Sales for May to extend the previous slump inflicted by Aussie inflation and hawkish Fed signals, not to forget China woes. That said, the major currency pair remains pressured near the 0.6600 round figure amid the early hours of Thursday’s Asian session.

On Wednesday, Australia’s Monthly Consumer Price Index (CPI) for May dropped to 5.6% YoY versus 6.1% expected and 6.8% prior. The same amplifies concerns about the Reserve Bank of Australia’s (RBA) pause in the rate hikes after two consecutive hawkish surprises, which in turn drowns the Australian Dollar (AUD). Adding strength to the downside momentum was China's Industrial Profits for May which dropped nearly 19% during the first five months of 2023.

Furthermore, the fresh fears surrounding the US-China tension, due to the Wall Street Journal (WSJ) news suggesting more AI curbs for companies from Beijing, joined the early week’s upbeat US data to weigh on the AUD/USD price.

On the other hand, hawkish comments from Fed Chair Jerome Powell at the ECB Forum and upbeat US Banking Stress Test results also exert downside pressure on the AUD/USD pair.

In his speech at the European Central Bank (ECB) Forum on central banking, Federal Reserve (Fed) Chairman Jerome Powell said, “We believe there's more restriction coming, driven by the labor market.” The policymaker also ruled out the economic downturn as the most likely case.

Elsewhere, “The Fed's ‘stress test’ exercise showed lenders, including JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Morgan Stanley and Goldman Sachs, have enough capital to weather a severe economic slump, paving the way for them to issue share buybacks and dividends,” reported Reuters.

Against this backdrop, Wall Street closed mixed and the bond yields were down while the US Dollar Index (DXY) marked the first daily gains in three and refreshed the weekly top.

Moving on, AUD/USD traders should pay attention to the first readings of Australia’s Retail Sales for May, expected 0.1% versus 0.0%, for immediate directions. Should the numbers arrive as stronger, the Aussie pair will have a reason to consolidate the previous day’s heavy losses.

“We thought AU CPI data would unleash volatility and it has, but the trouble is, it hasn’t really clarified the market’s view on whether the RBA will hike or not next week and that’s the next hurdle for the AUD, and by correlation the Kiwi,” said Analysts at the ANZ.

Apart from the Aussie data, the revised version of the US Gross Domestic Product (GDP) for the first quarter (Q1) 2023 and second-tier employment data could also entertain the traders. Furthermore, Fed Chair Powell is again scheduled for a speech in Madrid at a conference on Financial Stability and hence may allow the traders to witness a volatile day ahead.

Technical analysis

Although the oversold RSI (14) prods the AUD/USD bears, the pair’s sustained trading below the 200-DMA, around 0.6690 by the press time, directs the bears toward the 0.6580 support.

Additional important levels

Overview
Today last price0.66
Today Daily Change-0.0086
Today Daily Change %-1.29%
Today daily open0.6686
 
Trends
Daily SMA200.6719
Daily SMA500.6679
Daily SMA1000.6709
Daily SMA2000.6692
 
Levels
Previous Daily High0.6721
Previous Daily Low0.667
Previous Weekly High0.6886
Previous Weekly Low0.6663
Previous Monthly High0.6818
Previous Monthly Low0.6458
Daily Fibonacci 38.2%0.6701
Daily Fibonacci 61.8%0.669
Daily Pivot Point S10.6664
Daily Pivot Point S20.6642
Daily Pivot Point S30.6613
Daily Pivot Point R10.6715
Daily Pivot Point R20.6743
Daily Pivot Point R30.6766

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

More from Anil Panchal
Share:

Editor's Picks

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold holds above $4,000/three-month low as Fed hike bets and firm USD cap upside

Gold struggles to capitalize on its modest recovery from levels below the $4,000 psychological mark, or a three-month low set earlier this Friday, and retains a bearish tone through the first half of the European session. Federal Reserve officials recently signaled there is no urgency to raise interest rates. Traders, however, are still pricing in around an 80% chance that the US central bank will raise borrowing costs again at its December policy meeting.

Bitcoin, Ethereum, and Ripple rebound as major support levels cap recent sell-off

Bitcoin, Ethereum and Ripple rebound modestly on Friday after correcting and testing their key support zone the previous day. BTC holds the 50-day EMA, ETH finds support around the 100-day EMA, while XRP holds the horizontal floor near $1.300. The price action of these top three cryptocurrencies suggests a recovery if this critical support zone holds; a decisive close below these levels suggests a deeper correction.

The week ahead – UK budget, Shell, BP and HSBC and NatWest results
Financial markets have undergone another turbulent week with concerns about public sector debt levels, the impact of energy policy and higher oil and gas prices, and what events in France might mean for the UK economy going forward.
What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.