Australian Dollar, AUD/USD, Omicron, Risk Trends, RBA, ANZ Commodity Index - Talking Points
- Risk-sensitive Australian Dollar in focus as APAC trading begins
- Quiet event calendar leaves traders eyeing prevailing risk trends
- AUD/USD starts week with small bounce above major resistance
Monday’s Asia-Pacific Forecast
Asia-Pacific markets are set to begin trading with a cautious tone following last week’s volatility. The economic docket is rather sparse today, which may leave prevailing risk trends in control. Last week, risk aversion gripped the broader markets as the emerging Omicron variant weighed on sentiment. Wall Street’s ‘fear gauge’ VIX index rose to its highest level since the pandemic started. Investors are continuously assessing the newswires to evaluate the potential threat the new strain poses to financial markets.
Preliminary reports suggest Omicron is likely more contagious and potentially less deadly, a combination that actually may bode well for the pandemic and possibly bring about its accelerated end. Britain reported over 100 newly identified Omicron infections over the weekend, and Denmark has nearly 200 cases. The United States has reported a handful of cases. Perhaps one positive side effect of the Omicron variant is the large increase in vaccinations that it seems to have inspired, with the CDC reporting the highest daily totals seen since May.
The Australian Dollar will be in focus for today’s session, with the Reserve Bank of Australia’s policy decision set to cross the wires on Tuesday. Analysts expect the RBA to hold rates steady in its last meeting of the year. However, markets see a rate increase next summer, which is much earlier than the central bank’s forecast of 2024. Any hint that RBA Chief Lowe may be growing more hawkish may send AUD/USD higher. The currency pair has fallen for five straight weeks now and is currently at its yearly low.
The New Zealand Dollar has also performed poorly versus the US Dollar recently, with a pullback in some commodities weighing on the currency. New Zealand’s ANZ bank will release its monthly commodity prices index for November today. ANZ is also set to report job November advertisements for Australia. Elsewhere, the Philippines is set to report retail sales for October.
AUD/USD Technical Forecast
AUD/USD is trading slightly higher from fresh 2021 lows set last week. Major resistance from the November 2020 low sits just below the recently made yearly low. The Relative Strength Index is ticking higher from its most oversold reading since March 2020. MACD also appears to be moderating. If prices continue higher, the August low at 0.7106 may present resistance.
AUD/USD Daily Chart
Chart created with TradingView
--- Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwater on Twitter
