Australian Dollar, AUD/USD, AU Trade Balance, Retail Sales, Technical Outlook – Talking Points
- The Australian dollar gains a bit more against the US dollar after falling overnight
- Australian trade data and retail sales could lead to a volatile AUD/USD session
- AUD/USD at key price level, but bears may have the upper hand
Tuesday’s Asia-Pacific Outlook
The Australian dollar fell against the US dollar overnight as traders remained cautious ahead of several potentially high-impact events approaching. AUD/USD weakened with Wall Street equity markets, with the benchmark S&P 500 closing 0.14% in the red. This follows a mixed performance in Asian stock markets on Monday.
A seemingly more aggressive Federal Reserve is the main headwind for risky assets. Many traders now see a Fed rate hike in March as the most likely scenario, prompted by sustained inflation not only in the US but in many key global economies. China will release inflation data later this week, with price growth expected to moderate to 1.8% from 2.3% for December, according to a Bloomberg survey. Ex-factory prices in China are also expected to decline via the Producer Price Index (PPI).
The Australian Trade Balance for November is expected to cross the wires at 00:30 GMT, which could lead to moves in the Australian Dollar. Analysts expect Australia to post a surplus of A$10.6 billion, down slightly from October’s surplus of A$11.22 billion. A better than expected figure would likely improve the outlook for the Asia-Pacific economy, which would also bode well for the Australian dollar. Australian retail sales are also expected to fall with trade balance data, with the consensus estimate standing at 3.9% for November, down from October, when the figure jumped 4.9% after the cancellation of Covid restrictions.
Later today, the Philippines will also release trade data for November and its retail price index (October). November’s coincident index and Japan’s leading economic index will fall. Meanwhile, Covid cases rose in Australia, adding more than 67,000 to the tally on Monday after rising by 100,000 on Sunday. Australia is now avoiding lockdowns, with the vast majority of its adult population vaccinated.
AUD/USD Technical Forecast
AUD/USD is slightly higher at the start of APAC trading, but a conflict zone from the September low appears to be serving as resistance. An upside breakout would see prices test the decline of the 50-day simple moving average (SMA). A downward reversal could find support at the 23.6% Fibonacci retracement from the October/December move. A prolonged sell-off would threaten the November 2020 low. Overall, however, the downward trajectory seems the most likely given its technical position and a weakening MACD oscillator.
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