Australian Dollar, AUD/USD, Energy, Copper, Iron Ore, Economic Outlook - TALKING POINTS
- APAC markets may see a cautious trading session after US stocks fell overnight
- A rise in copper, iron ore and coal prices is supporting Australian Dollar strength
- AUD/USD is nearing its high-profile 200-day SMA after rising nearly 3% this week
Friday’s Asia-Pacific Outlook
US stocks closed mixed in New York as post-CPI exuberance faded despite additional signs that price pressures are easing. The high-beta Nasdaq-100 Index (NDX) closed 0.65% lower. The benchmark S&P 500, helped by the energy sector, managed to tread water, slipping only 0.07% at the close. The S&P 500’s energy GICS sector rose 3.19% as crude oil prices climbed, while health care fell 0.71%. The US-listed Nasdaq Golden Dragon China Index offered a positive sign for Asian equities, rising 2.60%.
Brent crude and WTI crude oil prices rose almost 3% overnight after the International Energy Agency (IEA) increased its demand outlook for this year by 380k barrels per day (bpd). An increase in natural gas and other energy prices was cited by the Paris-based agency. Those higher prices may force some countries to burn oil instead of natural gas to supply energy, increasing demand for the commodity.
That said, natural gas prices increased across the European, Asian and US benchmarks. Europe’s energy situation has darkened due to near-critically low water levels in the Rhine river —a vital waterway for the transport of coal and other industrial goods in Germany. The lack of coal combined with low levels of hydroelectric supply threatens Europe’s effort to stockpile natural gas ahead of the winter.
Coal prices at the Newcastle coal terminal in Australia climbed above $400 per metric ton (mt). Iron ore prices in China finished above $110, and copper prices gained 1.56% in New York. A pullback in the US Dollar allowed broader strength across the commodities sector. The commodity-sensitive Australian Dollar moved higher against most of its peers despite an increase in China’s local Covid cases.
The New Zealand Dollar climbed over 0.5% higher against the Greenback. The island nation’s Performance of Manufacturing Index rose to 52.7 in July from an upwardly revised 50.0 in June, according to BusinessNZ. The Performance of Services Index (PSI) and second-quarter Producer price index input/output data are the last data points due out before the RBNZ’s August 17 rate announcement. The swap market is favoring a 50-basis-point OCR hike.
Notable Events for August 12:
Japan – Foreign Bond Investment (06/August)
Philippines – Retail Price Index YoY (April)
Japan – 3-Month Bill Auction
India – Passenger Vehicles Sales MoM (July)
Hong Kong – GDP Growth Rate Final (Q2)
AUD/USD Technical Outlook
After yesterday’s failed intraday attempt, AUD/USD pierced above the 100-day Simple Moving Average (SMA), with prices now facing the high-profile 200-day SMA. If bulls clear that SMA, the June high would shift into focus as the next target at 0.7283. Alternatively, a drop back below the 100-day SMA may drag prices down to the prior wedge target at 0.7037.
AUD/USD Daily Chart
Chart created with TradingView
Trade Smarter - Sign up for the DailyFX Newsletter
Receive timely and compelling market commentary from the DailyFX team
--- Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwater on Twitter
