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AUD/USD Grips Trendline as Shanghai Covid Fears Resurface
- 2022/7/6
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No CommentsWEDNESDAY’S ASIA-PACIFIC OUTLOOK
Investors flocked to haven assets overnight amid a volatile trading session in New York. US stocks started the day with steep losses but rallied into the close as falling bond yields helped take pressure off valuations. The benchmark 10-year Treasury yield fell to its lowest level since May. Investors are turning bullish on bonds amid signs that inflation may have peaked, reflected by easing market bets for future Fed rate hikes.Oil prices plummeted as recession fears picked up. Energy traders are betting that demand may have hit a peak following the busy US holiday that typically brings near-record travel numbers. The rising Dollar was another headwind for energy prices. Moreover, a new round of mass testing was launched in Shanghai, China, following reports of multiple Covid-19 cases from earlier in the week. Given the prospect of increased restrictions should cases continue to rise, it may put a dent in regional sentiment for today’s session. That said, the Australian Dollar’s fall versus the US Dollar may continue.
The New Zealand Dollar faces mounting headwinds as milk prices continue to slide. Milk is a major export for the Kiwi economy, making its currency vulnerable to outsized price swings in the commodity. New Zealand’s global dairy trade price index recorded a 4.1% drop this morning, following a 1.3% decrease two weeks ago. The move in diary echoes the activity seen in the broader food-based commodity market, with the grain market sliding further overnight. Corn and wheat futures fell nearly 5% overnight in New York.
The Reserve Bank of Australia’s chart pack is set to cross the wires today, as is typical following a rate decision. The data will be useful in analyzing the RBA’s recent decision and its possible path forward, but it is likely to play second fiddle to market risk trends. News out of China regarding lockdowns is likely to pose the highest risk to traders.
— Written by Thomas Westwater, Analyst for DailyFX.com -
Australian Dollar Q3 2022 Forecast: Fed’s Lost Credibility is Noted by RBA
- 2022/7/4
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The Australian Dollar made a 2-year low against the US Dollar in May as global central banks jockeyed for position in the fight on inflation.
The monetary policy tightening cycle pivoted dramatically in the second quarter toward a far more aggressive stance from both the Reserve Bank of Australia (RBA) and the Federal Reserve, among others. Notable exceptions from contracting monetary conditions are the Bank of Japan (BoJ) and the Peoples Bank of China (PBOC).
Going into the third quarter, the latest year-on-year headline CPI for the US is 8.6% and 5.1% for Australia.
MONETARY POLICY MATTERS
The response from the Fed was to go toward a jumbo hike of 75 basis points at their last Federal Open Market Committee (FOMC) meeting. The RBA also added an outsized rate rise of 50 basis points in June. The language coming from both camps is that further hikes of a similar size are on the cards.The above highlights the differences and the consequent acceleration in US Dollar appreciation more broadly. USD/JPY for instance, is at a 24-year high, illustrating the markets focus on policy disparities.
AUD/USD remains vulnerable to swings in perceptions on where interest rates are headed. RBA Governor Philip Lowe recently stated that Australians should prepare for a potential cash rate of 2.5% later this year, when they expect inflation to reach 7%. With the cash rate at 0.85%, this implies at least one more lift of 50 basis points.
INFLATION IS THE FOCUS
A key driver of any addition or subtraction to the RBA’s cash rate guidance is CPI. Second quarter CPI is building up to be a pivotal data point and it will be delivered 27th July. Dr Lowe has made it very clear in recent public comments that the rate of change in inflation will be the emphasis in shaping policy.The RBA have consistently spoken of the rate of change in CPI as being a crucial factor in determining monetary policy changes. While the RBA monetary policy meeting in early July appears likely to deliver a 50 bp lift, the CPI number later that month will tell the market if another 50 bp hike in August is coming or not.
The importance of this CPI number for future guidance on rate rises cannot be overstated. The consequences for AUD/USD will flow from this data point. The Federal Reserve saw US inflation accelerating at an alarming pace going into the end of 2021 and were too slow to act. Inflation in the US has never fallen by 2% or more without a recession.
Despite what President Biden et al might like to happen, any astute observer finds it difficult to see US inflation getting back toward the Fed’s target of 2% without a recession.
The Fed are now paying a dear price for inaction. The RBA have said all the right things to avoid such a disastrous situation, but the economy will judge them on their actions.
COMMODITIES ARE ADDING VALUE
In the background, commodity market volatility hums along. The Russian invasion of Ukraine underpins Australian exports, while China’s approach to managing Covid-19 undermines them. Net-net, circa AUD 10 billion is still being added each month to Australia’s bottom line via trade.Rolling into the third quarter, the Australian economy is in the best shape it has been in for generations. This gives the RBA plenty of scope for outsized rate hikes. For now, the market is focused on the rate hike path for AUD/USD. If you have read to this part of the article, mark 27th July in your calendar.
(From Daniel Mccarthy) -
AUD/USD Price Forecast – The Australian Dollar Continues to Consolidate
- 2022/6/29
- Posted by: admin
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The Australian dollar has rallied significantly during the trading session on Tuesday in the early hours but has seen a lot of selling pressure just above. Keep in mind that the Australian dollar is highly sensitive to the commodity markets, which has a major shift coming. After all, we have seen copper nosedive, right along with natural gas. On the other side of the spectrum, oil has taken off, but it should be noted that commodity markets are simply showing just how “lumpy” the overall supply chain is at the moment.
The 0.70 level above is a major round figure that a lot of people will pay close attention to, as it is a large, round, psychologically important figure, and an area where we have seen a lot of “flipping” recently. All things being equal, I think this is a market that will continue to find sellers on rallies, with the 50 Day EMA also racing below the 0.71 level to cause major issues.
The “double bottom” underneath is near the 0.68 level, and if we can break down below there, then it’s likely that the market could go much lower. In fact, when you look at the longer-term charts, that is a crucial level that needs to hold, or else the US dollar will destroy the Aussie dollar in the short term. On the upside, it’s really not until we break the 0.73 level that the trend could be looked at as being positive for something that’s going to be bigger than a simple short-term bounce.
(From YahooFinance) -
AUD/USD Price Forecast – The Australian Dollar Pulled Back to Kick Off the Week
- 2022/6/28
- Posted by: admin
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The Australian dollar has fallen on Monday, to kick off the week on its back foot. Ultimately, the 0.6850 level is an area that I think could offer a significant amount of support, as we have seen action there previously. I think it is going to end up being a 50 PIP support level that extends down to the 0.68 handle, so once we get below that level, I think we have a high likelihood of the Aussie continuing to go lower.
The Australian dollar is highly levered to commodity markets, so pay attention to those as well. There is concern about a global slowdown, as the economy seems to be crumbling. If that’s going to be the case, it’s likely that we would see the Aussie suffer as a result. Furthermore, you need to pay close attention to China, and how is behaving. Keep in mind that the Australian dollar tends to be very sensitive to the Chinese mainland, which is currently in the process of trying to stimulate the economy, so you will have to keep an eye on how things pan out there.
The Federal Reserve continues the tight monetary policy, so that does favor the US dollar in general, especially as it looks like the Federal Reserve is insistent on becoming aggressive. As long as that’s going to be the case, the US dollar will continue to be relatively strong against multiple currencies, not just in the AUD/USD pair. Furthermore, if we continue to see a lot of “risk off behavior”, it’s possible that the US dollar will gain as well.
(From YahooFinance) -
Central Bank Watch: BOE & ECB Interest Rate Expectations Update
- 2022/6/24
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CENTRAL BANK WATCH OVERVIEW:
Bank of England rate hike odds keep rising: the 2022 terminal rate is up to 2.827%, from 2.099% in mid-May.
The European Central Bank is expected to raise rates by 150-bps through 2022.
Retail trader positioning suggests both EUR/USD and GBP/USD rates have a mixed bias.
EVEN MORE RATE HIKES
In this edition of Central Bank Watch, we’ll cover the two major central banks in Europe: the Bank of England and the European Central Bank. While both the Eurozone and the UK are struggling with diminishing growth rates, policymakers remain squarely focused on taming multi-decade highs in inflation rates. Rate hike odds have jumped significantly for both the BOE and the ECB, with at least 150-bps worth of hikes discounted through the end of 2022.For more information on central banks, please visit the DailyFX Central Bank Release Calendar.
BOE HIKE ODDS KEEP CLIMBING
The British Pound has proved resilient in recent weeks, no doubt fueled by the continued climb in BOE rate hike odds. UK inflation rates continue to edge higher, and with few signs that the rises in food and energy prices will halt anytime soon, rates markets are now their most aggressive they’ve been all year in terms of BOE hike odds.
— Written by Christopher Vecchio, CFA, Senior Strategist -
Markets week Ahead: Dow Jones, US Dollar, USD/CAD, GBP/USD, USD/JPY, Powell, Inflation
- 2022/6/20
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Global financial markets moved diligently to price in the latest action from the Federal Reserve last week when Mr. Powell’s FOMC raised the US benchmark rate by 75-basis-points. The jumbo rate hike tempered inflation expectations, and perhaps returned some credibility to the institution. However, the impact on equity markets was undeniably bearish. The Dow Jones Industrial Average (DJIA) fell over 4% to its lowest level since November 2020.
The US Dollar benefited from the safe-haven flows despite an immediate reaction to the downside. The DXY index was up around 0.50% going into the weekend. However, there are technical signs across major crosses, such as EUR/USD, GBP/USD, AUD/USD and USD/CAD, that show the Dollar’s ascent is perhaps at or near a critical juncture. The Bank of England remained in a relatively dovish stance, hiking its benchmark rate by 0.25%. The Dollar advanced against the Pound, but trimmed some of those gains in the second halve of the week.
Oil prices plummeted on Friday as traders baked in growing fears over a Fed-induced recession. That comes amid the summer driving season, which typically sees higher demand for fuels persist into the fall months. Natural gas prices found relief in the United States after an LNG terminal suffered a catastrophic failure, likely to take months to repair. European prices, however, skyrocketed. The development is likely to keep prices in Europe elevated, further complicating Europe’s inflation outlook.
Speaking of energy prices, Canada is set to report inflation data for May on Wednesday. The country’s consumer price index (CPI) is expected to cross the wires at 7.5% on a year-over-year basis. That would be up from April’s 6.8% y/y increase. A hotter-than-expected print would likely inspire already-aggressive Bank of Canada rate hike bets, potentially bolster the Canadian Dollar.
Japan is also slated to release inflation data for May. The Bank of Japan held firm in its dovish stance last week against a market that appeared to be trying to force the BoJ’s policy stance. That didn’t happen. The mantra of “don’t fight the Fed’ seems to be just as appropriate for the Bank of Japan. The Yen fell versus the Dollar last week, although the pace of losses started to cool. A hotter-than-expected CPI print out of Japan may actually see USD/JPY fall.
(From DailyFX) -
Australian Dollar Technical Forecast: AUD/USD V-Shaped Recovery Brews
- 2022/6/17
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The Australian Dollar surged more than 3% off the weekly lows on the heels of the Fed with Aussie snapping back above a key support pivot. The reversal hinges on a weekly close above this threshold and may fuel a larger recovery in the days ahead if achieved. These are the updated targets and invalidation levels that matter on the AUD/USD weekly price charts into the close. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Aussie technical setup and more.
Notes: In my last AUD/USD Weekly Technical Forecast we warned that, “a rebound off downtrend support takes the Australian Dollar into downtrend resistance early in the month- risk for topside exhaustion into 7288.” Aussie registered a high at 7283 later that week before reversing sharply lower with price plummeting nearly 6% off the highs. The post-FOMC rally has now recovered back above a critical pivot zone we’ve been tracking at 6991-7016 – a region defined by the November 2020 swing low, the objective 2020 yearly open, the 2021 lows and the January low-week close. Was that a near-term exhaustion low?
Initial weekly resistance now eyed at the recent high-week close at 7206 backed by the yearly open / 38.2% Fibonacci retracement of the 2021 decline / 52-week moving average at 7270/78. Ultimately a breach / weekly close above the 61.8% retracement / 2017 low-week close at 7343/85 would be needed to suggest a more significant low was register this week. A close below 6991 this week would keep the focus on subsequent support objectives into the 2016 low at 6827, the lower parallel and the 2008 low-week close / 2019 low at 6660/70.
Bottom line: This could be a near-term exhaustion low in Aussie and the focus is on the weekly close with respect to 6991-7016. From a trading standpoint, a close above this threshold would risk a larger recovery towards downtrend resistance near the 72-handle. On the other-side of 6991, and things could fall apart rather quickly- stay nimble here. The economic docket is light next week so we’ll continue to track price action closely into the open on Sunday. I’ll publish an updated Australian Dollar Price Outlook once we get further clarity on the near-term AUD/USD technical trade levels.
— Written by Michael Boutros, Technical Strategist with DailyFX -
AUD/USD Reverses Ahead of Yearly Low with Australia Employment on Tap
- 2022/6/16
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AUD/USD quickly retraces the decline following the Federal Open Market Committee (FOMC) interest rate decision as Chairman Jerome Powell tames speculation for a 100bp rate hike, with the central bank head indicating that a 50bp or a 75bp increase could be appropriate at its next meeting in July.
The comments suggest the FOMC will moderately adjust its approach in combating inflation as the majority forecast the Fed Funds rate to climb above 3.00% by the end of the year, and it seems as though the central bank will continue to utilize the benchmark interest rate to address the risks surrounding the US economy amid the preset approach in reducing the balance sheet.
Looking ahead, it remains to be seen if Chairman Powell and Co. will continue to adjust the forward guidance for monetary policy as the FOMC shows a greater willingness to carry out a restrictive policy, but the market reaction raises the scope for a larger rebound in AUD/USD as it snaps the series of lower highs and lows carried over from the previous week.
In turn, the update to Australia’s Employment report may fuel the rebound from the monthly low (0.6850) as the economy is projected to add 25K jobs in May, and a further advance in the exchange rate may help to alleviate the tilt in retail sentiment like the behavior seen earlier this year.
The IG Client Sentiment report shows 70.46% of traders are currently net-long AUD/USD, with the ratio of traders long to short standing at 2.39 to 1.
The number of traders net-long is 4.02% higher than yesterday and 22.58% higher from last week, while the number of traders net-short is 15.57% lower than yesterday and 28.65% lower from last week. The rise in net-long interest has fueled the crowding behavior as traders were net-short AUD/USD at the start of the month, while the decline in net-short position comes as the exchange rate snaps the series of lower highs and lows from last week.
With that said, AUD/USD may continue to reverse course ahead of the yearly low (0.6829) as the Fed rate decision fuels the rebound from the monthly low (0.6850), and the bearish momentum may continue to abate over the coming days as the Relative Strength Index (RSI) bounces back ahead of oversold territory.
— Written by David Song, Currency Strategist -
Holiday notice for Queen’s Birthday
- 2022/6/10
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Dear customers, due to the Queen’s Birthday, all Supay branches of Melbourne, Sydney and Adelaide will be closed on Monday, June 13, 2022, and will resume business on June 14, 2022. Please adjust your transaction time. We apologise for any inconvenience caused. If you have any enquiries during the holiday, please contact Brisbane Branch, Tel: 07 3344 1818 ,wish you a happy holiday, thank you.
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Australian Dollar Post-RBA Boost May Continue as Uranium Prices Surge
- 2022/6/8
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- Category: 暂无
WEDNESDAY’S ASIA-PACIFIC OUTLOOK
The Australian Dollar paced higher against the US Dollar through the New York trading session overnight, benefiting from Tuesday’s Reserve Bank of Australia (RBA) rate decision. A rosy session on Wall Street helped support the risk-sensitive currency as the Dollar fell against most of its peers. The Japanese Yen, however, continued to deteriorate, with USD/JPY hitting a fresh multi-decade high.Australian bond yields rose following the RBA’s surprise decision as traders ditched bond holdings in preparation for further rate hikes this year. Analysts moved quickly to price in more aggressive rate hike bets for the July RBA meeting. The higher trajectory has some economists concerned that it may trigger a recession as households grapple with high debt levels.
Spot uranium prices rose on news that the United States may see a government-led initiative to bolster the country’s uranium supply and industry. Australia, being a large exporter of uranium, may benefit from the higher prices. If the US follows through and creates a stockpile of uranium, it would likely tighten global supply. Brazil recently loosened restrictions around uranium mining, also responding to the impacts of the war in Ukraine.
A global recession remains a notable question mark hanging over markets, something that is likely to temper sentiment through the remainder of the year as central banks tighten down on prices. A report released by the World Bank signaled a worrying concern over a global recession. The report showed that world growth is expected to cool this year to 2.9%. That is well below what the IMF forecasted earlier this year. Growth-sensitive oil prices rose despite the grim report. The American Petroleum Institute (API) reported a build in US crude inventory levels, which also failed to cool WTI prices.
This morning, Japan’s final first-quarter GDP growth numbers will cross the wires. Japan’s monetary policymakers have been hesitant to join its peer institutions in normalizing policy amid lagging inflation and wages. Later today, Australia will see a business confidence update for May from the NAB, along with the RBA chart pack. The Reserve Bank of India (RBI) is expected to increase its benchmark rate by 40-basis points. USD/INR may fall on the decision’s delivery, especially if the RBI takes a cue from the RBA and delivers a jumbo hike.
AUD/USDTECHNICAL FORECAST
AUD/USD is attempting to break above the pseudo-50% Fibonacci retracement level, which sits directly below the May swing high. If prices break above those levels of resistance, more upside may follow. The MACD oscillator crossed above its centerline, aiding the case for higher prices. Alternatively, a drop would put the 38.2% Fib level on the defense.
— Written by Thomas Westwater, Analyst for DailyFX.com