- Money market futures have fully priced in a 75 bps, though 1 in 4 expect a 100 bps lift.
- The AUD/USD gained some traction bolstered by US dollar weakness.
- AUD/USD Price Analysis: Positive divergence in the daily chart suggests sellers’ exhaustion.
The AUD/USD stopped the bleeding and jumped off weekly lows at around the 0.6700 figure after the US Producer Price Index report for August alleviated some of Tuesday’s CPI worries, which sent most risk assets tumbling, while the greenback rose above the 110.00 thresholds, on renewed inflation fears. Nevertheless, as of writing, sentiment is mixed, though it appears that traders are in wait-and-see mode.
On Wednesday, the major began trading at around 0.6720s and edged toward its weekly lows nearby the 0.6700 figure, forming a double bottom as shown by the AUD/USD hourly chart, and climbed towards its daily high at 0.6760. At the time of writing, the AUD/USD is trading at 0.6737, above its opening price by 0.17%.
US inflation data has been grabbing all the headlines in the last couple of days. On Tuesday, August, core CPI edged above the 7% YoY threshold above estimations, fueling speculations that the Fed might lift rates 100 bps in the September meeting. Nevertheless, August’s Producer Price Index (PPI) has tempered concerns, with figures coming aligned with estimations and flashing positive news regarding supply chain disruptions.
The reflection of the abovementioned is the US Dollar Index, losing some traction, down by 0.09%, below the 110.000 mark. At the same time, the US 10-year benchmark note rate shows signs of exhaustion, flat at around 3.414%.
An absent economic docket left the Aussie adrift to US dollar dynamics. Australian data revealed during the week showed that business confidence improved. Later, Australian employment data would be disclosed. August’s Employment Change is estimated at 35K, while the Unemployment Rate is expected to remain at 3.4%.
On the US front, the US economic calendar will feature Fed’s Regional Manufacturing Indices, alongside unemployment claims and retail sales data for August-
AUD/USD Price Analysis: Technical outlook
The AUD/USD is downward biased, but a doji in the daily chart suggests that selling pressure is evaporating. US dollar positioning is overextended, and with the Relative Strength Index (RSI) printing higher lows, contrarily to price action reaching lower lows, a positive divergence is surging. That said, the major might edge higher ahead of next week’s US FOMC monetary policy decision.
On the upside, resistance lies at 0.6800, which, once cleared, exposes the 20-day EMA at 0.6839, ahead of the 50-day EMA at 0.6890. On the flip side, the AUD/USD first support would be 0.6700, followed by the YTD low at 0.6681 and the 0.6600 figure.