AUD/USD Probes September High as APAC Traders Eye China’s Lending Rates

Australian Dollar, AUD/USD, Fed, PBOC, Crude oil – Talking Points

• Australian Dollar gains as Wall Street moves higher on risk taking
• Chinese lending rates, Australian Westpac data in focus for APAC
• AUD/USD test the multi-month September swing high at 0.7478

Wednesday’s Asia-Pacific Forecast

The Australian Dollar made a big move higher versus the US Dollar overnight after Wall Street traders shifted back into a risk-on stance. The Dow Jones Industrial Average (DJIA) closed 0.54% higher. A string of positive corporate earnings is helping to bolster risk-taking. Netflix reported strong third-quarter numbers following the New York closing bell.

Federal Reserve Governor Christopher Waller said overnight that balance sheet growth tapering should start after the next FOMC announcement. Mr. Waller gave an optimistic outlook on employment while playing down inflation threats. The next FOMC meeting will take place on November 2-3. Treasury yields on the long-end of the curve rose, while the shorter-term 2- and 5-year notes’ yields fell.

Today’s Asia-Pacific session will see Japan report its September trade figures, with analysts expecting a 519.2 billion yen deficit. Australia’s Westpac leading index (Sept) will follow at 00:00 GMT. Later in the day, China will see new home prices for September cross the wires. Traders are also keeping an eye out for the People’s Bank of China (PBOC) to set its 1- and 5-year loan prime rates. Analysts expect to see no changes to either setting.

Elsewhere, oil prices gained despite the American Petroleum Institute (API) reporting a large inventory build. Crude oil stocks for the week ending October 15 crossed the wires at 3.294 million barrels, exceeding the 2.233 million barrel consensus forecast build, according to the DailyFX Economic Calendar. Natural gas prices rose nearly 2%, although prices remain down on the month.

AUD/USD Technical Forecast

AUD/USD gained overnight, testing the multi-month September swing high at 0.7478 before easing slightly. A bullish crossover between the 20- and 50-day Simple Moving Averages (SMAs) occurred overnight, which indicates an uptick in upside momentum. Breaking above the September high will open the door for a quick test of the psychologically imposing 0.75 handle.

AUD/USD Daily Chart

Chart created with TradingView

--- Written by Thomas Westwater, Analyst for DailyFX.com

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