AUD/USD ANALYSIS & TALKING POINTS
- Chinese inflation miss weighing on AUD.
- Fed speakers in focus.
- Ascending triangle remains in play but AUD weakness.
AUSTRALIAN DOLLAR FUNDAMENTAL BACKDROP
The Australian dollar opens the week on the backfoot beginning with Chinese CPI and PPI data (see economic calendar below) that missed forecasts underlying the lack of demand within the Chinese economy. Being a major exporter to China, the Aussie dollar is largely positively correlated to the Chinese environment and with the slump in growth, commodity demand is likely to decline leaving the AUD vulnerable to the downside.
In addition, the US dollar has regained some of its losses post-NFP on Friday and although NFP’s missed, the overall report maintained tight labor market conditions leaving the probability for a 25bps rate hike largely unchanged. The focal point this week will come via the US CPI release, expected to fall further on both headline and core metrics leaving the USD exposed to further weakness. The rest of today’s trading day includes several Fed speakers who should give some reaction to last week’s economic data.
AUD/USD ECONOMIC CALENDAR (GMT +02:00)
Source: DailyFX economic calendar
TECHNICAL ANALYSIS
AUD/USD DAILY CHART
Chart prepared by Warren Venketas, IG
Daily AUD/USD price action remains within the developing ascending triangle formation (dashed black line) but has since dipped below both the 50-day and 200-day moving averages respectively favoring short-term bearish momentum.
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Key resistance levels:
- 0.6800
- 0.6772
- 0.6700/Triangle resistance
- 200-day MA (blue)
- 50- day MA (yellow)
Key support levels:
- Triangle support
- 0.6620
- 0.6565
IG CLIENT SENTIMENT DATA: MIXED
IGCS shows retail traders are currently net LONG on AUD/USD, with 67% of traders currently holding long positions. At DailyFX we typically take a contrarian view to crowd sentiment but due to recent changes in long and short positioning we arrive at a short-term cautious disposition.
Contact and followWarrenon Twitter:@WVenketas
