AUD/USD: Steady between 0.7050/90 ahead of Brexit vote and Chinese data dump

AUD/USD has been on the backfoot again within the 2018 downtrend following a series of poor data releases that likely mean the RBA is on the defensive side, with mounting speculation pointing towards a rate cut. At the same time, Chinese economic reports (trade, credit, PMIs) have been weak, Jand today we will have Jan/Feb activity data as well as Aussie consumer inflation expectations. 

The latest round of data misses for the Aussie came from a release that dies not usual garner too much attention, Westpac's consumer confidence index. However considering the focus on the economy, traders were keen on the numbers that arrived as 98.8, where current conditions eased by -2.8% while expectations slumped by -6.1%. This data send the Aussie lower by over 20 pips overnight.

• Wall Street holds to gains ahead of Brexit vote

For today, the Aussie will struggle on the bid considering the risk-on tone on Wall Street with the benchmarks all higher as well as a strong durable goods number from the US. The next risk that could see some price action going through the FX space will be more Brexit voting following yesterday's defeat for May - The risk is that the UK could be heading for a hard Brexit even if Parliament vote for an extension to Article 50 and an EU member decides veto such a request.

• Michel Barnier speaking to Euronews: Negotiations are over

Mixed outlook for U.S. dollar

"The overall outlook for the USD remains mixed and cautious trading continues to be advised. Event risk will keep traders playing the short game,"  

Greg Gibbs, Analyst, & PM as Amplifying Global FX Capital Pty Ltd argued. 

AUD/USD levels

Analysts at Commerzbank noted that AUD/USD continues to bounce higher very near term, and we would allow for this to extend towards the 55 day ma at 0.7126 and the near term resistance line at .7150:

"Currently our Elliott wave counts are negative and we look for failure in this zone and for further weakness to 0.6950, this is the 61.8% retracement of the move up from January 2019. There is scope for the .6857/78.6% retracement. Rallies will find initial resistance at 0.7125 (55 day ma) and .7207 (end of February high) and are likely to remain capped by the 0.7231 200 day ma. Price action in January was exhaustive – the market charted a hammer (reversal). This suggests the down move ended at 0.6738."