- AUD/USD retreats from intraday high, fails to extend Friday’s gains.
- Market begins the key week with cautious optimism following Friday’s US CPI data.
- Dalian iron ore futures jumped over 5%, Asia-Pacific stocks trade mixed.
- China data dump can offer intermediate direction ahead of Fed’s verdict, Aussie jobs.
AUD/USD fades Friday recovery moves, easing to 0.7170 ahead of Monday’s European session.
The Aussie pair initially cheered the market’s optimism and stimulus news from Australia, as well as China, to pare the day-start losses. Though, market fears ahead of the key events lined up for publish during the week seem to weigh on the quote of late.
Australia's Treasurer Frydenberg is expected to announce on Monday, an extension to the government’s existing loan guarantee scheme for small to medium-sized businesses due to expire at the end of December, per Aussie media. On the other hand, Chinese policymakers vowed to use monetary and fiscal policy tools to stabilize the world’s second-largest economy in 2022 during the annual Central Economic Work Conference.
Also positive for the AUD/USD are the firmer prices of its largest export item iron ore. “Iron ore futures for May 2021 delivery rises past 5.0% to 671 yuan ($105.46) per ton,” said Reuters during the Asian session.
It’s worth observing that Friday’s US Consumer Price Index (CPI) data favored market sentiment and the AUD/USD prices as the inflation data matched expectations for November. Also favoring the pair buyers was a reduction in the US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data.
That said, market fears surrounding the Fed’s faster tapering and rate hike signals haven’t yet faded as a widespread breakout of the South African covid variant, dubbed as Omicron, favors the policy hawks to expect further inflation and the need for tighter policies. On the same line are the chatters over some of the Chinese companies’ production suspension Zhejiang Province and postponing of the SenseTime Hong Kong IPO worth $767 million.
Amid these plays, the US 10-year Treasury yields wobbled around 1.49% while the US stock futures printed mild gains and the Asia-Pacific shares traded mixed at the latest.
Moving on, a lack of major data/events at home will keep AUD/USD traders cautious but Wednesday’s China data dump may provide intermediate relief to the pair optimists before the Fed’s verdict.
Technical analysis
AUD/USD trades successfully above a five-week-old descending trend line and 50-SMA, respectively close to 0.7120 and the 0.7100 threshold, taking rounds to 100-SMA recently. However, a fortnight-long horizontal area challenges the bulls around 0.7190 as MACD shows traders’ indecision and RSI nears the overbought region, suggesting the need for a strong push to the north if buyers want to keep the reins.
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 clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.