Australian Dollar, AUD/USD, Trade Balance, Crude Oil - Talking Points
- Australian Dollar gains as Wall Street traders push US stocks higher
- Trade data may reflect weakness from lockdowns across Australia
- AUD/USD’s trendline break puts the currency pair on brighter path
Thursday’s Asia-Pacific Outlook
The risk-sensitive Australian Dollar moved higher versus the US Dollar overnight as equity traders bought US stocks. AUD/USD pushed to its highest level since August 13 while the tech-heavy Nasdaq 100 Index closed 0.19% higher. A broad move lower in the US Dollar aided the Aussie Dollar. Australia’s second-quarter GDP print beat estimates on Wednesday, which likely gave the currency pair an added tailwind.
Australia is set to report its July trade balance today. Analysts expect the figure to cross the wires at A$10.2 billion, a small decline from June’s A$10.5 billion print. Import strength will help analysts gauge consumer strength amid ongoing lockdowns across Victoria and New South Wales (NSW). The economic crippling restrictions crippled consumer consumption within the quarter, which may translate to a weaker import figure. Exports may help shed light on some of Australia’s key trading partners, such as China, with iron ore being a key export to the economic powerhouse.
Elsewhere, New Zealand reported its second-quarter terms of trade this morning. Export prices rose 8.3%, up from -0.8% in Q1 and over the consensus estimate of 3%. Import prices came across at 4.8%, up from -0.8% and above the estimate of 1.8%. Earlier this week, New Zealand’s ANZ business confidence index dropped to -14.2 for August. That is the lowest read since October 2020. The recent lockdowns in Auckland appear to be a driving factor for the downbeat confidence print.
Oil benchmarks gave up early-session gains made on a larger-than-expected draw in US inventories, according to EIA data. The Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, decided to keep increasing output at the monthly pace of 400k additional barrels per day (bpd). That decision may keep some overhead pressure on prices in the near term, particular if Covid infections worsen globally.
AUD/USD Technical Outlook:
AUD/USD completed a full retracement of its move lower, which stemmed from a retest of a Rising Wedge pattern’s lower bound back in mid-August. Upside accelerated overnight after the currency pair broke above its 26-day Exponential Moving Average (EMA) and a descending channel. That channel may serve as support on the next swing lower. Overall, the trendline break puts AUD/USD bias to the upside for now.
AUD/USD Eight-Hour Chart
Chart created with TradingView
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--- Written by Thomas Westwater, Analyst for DailyFX.com
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