- AUD/USD holds upside bias, although capped by 0.7280/85.
- US data: ADP report comes above expectations.
- Fed’s Powell: Fed prepared to raise rates in March, economic outlook uncertain.
The AUD/USD is rising modestly on Wednesday on the back of a recovery in risk sentiment and amid higher commodity prices. The pair peaked at 0.7281 and then pulled back to 0.7265. It is moving sideways, holding onto recent gains.
In Wall Street, the main indices are rising 0.65% on average. The US dollar is mixed. It gained some momentum after the ADP report for February that came in above expectations. US yields are higher, helping the greenback. Fed’s Powell is about to testify before Congress. In his initial remarks, he mentioned that the Fed is ready to raise rates in March.
Earlier on Wednesday, Australia’s growth data showed GDP rose at a 3.4% rate during the fourth quarter, above expectations, and recovered after a Q3 contraction. “Australia is decidedly moving on from the COVID crisis. With c.80% of the population fully vaccinated, reopening of the economy now appears more sustainable. We upgrade our 2022 GDP growth forecast to 4% from 3.7% given the strong recovery”, mentioned analysts at Standard Chartered. On Thursday, data to be released in Australia includes the Commonwealth Bank PMI, Building Permits and trade numbers.
AUD/USD Short-term outlook
The outlook remains positive for the AUD/USD, particularly while above the 100-day simple moving average at 0.7235. A decline under 0.7230 would alleviate the bullish tone, exposing the next critical support seen around 0.7180 (20 and 55-day SMA).
On the upside, AUD/USD is facing strong resistance around 0.7280/85. A consolidation above 0.7280 should clear the way for 0.7300, with the next resistance seen at the January high at 0.7315 (January 13); the 200-day SMA awaits at 0.7327.