Oct 19, 2022
VOT Research Desk
Market Insights, Considerations & Analytics
Stocks in the Asia-Pacific region appear ready to profit from a positive session on Wall Street.
Iron ore prices are facing increasing headwinds, and Australia’s Westpac Leading Index is expected soon.
As the September swing high comes into view following the RSI crossover, USD/CNH moves higher.
The risk-on rally in New York, which saw Wall Street stocks rise for a second day, appears to have pushed Asian markets higher on Wednesday. Tuesday saw a gain of 1.12% for the Dow Jones. Following Netflix’s third-quarter earnings report, which impressed investors with better-than-expected numbers across a variety of metrics, after-hours trading saw a gain of more than 10%.The streaming giant exceeded its forecast by two million paid subscribers.
In the midst of risk-on flows, the risk-sensitive Australian dollar rose against the US dollar, but the New Zealand dollar performed better, with AUD/NZD dropping around 0.6%.The commodity-sensitive currency is being weighed down by the recent stagnation in iron ore prices, an important export for Australia. Major miners Rio Tinto and Vale cautioned that the outlook for the industrial metal may suffer as a result of China’s economic situation. In their respective quarterly reports, both miners provided the aforementioned estimates, putting additional pressure on prices.
Since there isn’t much on the economic agenda right now, risk trends are in charge. That is encouraging news for today’s trading session, particularly in the equity market. The following was stated in the policy minutes that were released on Tuesday by the Reserve Bank of Australia and emphasized the impact of rising rates elsewhere:
Given that the global outlook had deteriorated, external inflationary pressures may ease quickly. Although the Federal Reserve’s rate-hiking cycle may have reached its zenith, US rates are still higher than those of the RBA, which should keep the AUD/USD under pressure. Commodity prices had generally fallen, and supply chain pressures had begun to ease.
Australia’s Westpac leading index for September is scheduled to be released today. Because there isn’t much economic news elsewhere, the market is dominated by current risk trends. China’s currency is still under pressure elsewhere as a result of the delay in GDP data for the third quarter.
Technical perspective for the Chinese Yuan The Chinese yuan is trading at its lowest point ever against the United States dollar (ignoring an intraday move from late September).The USD/CNH Relative Strength Index (RSI) reached levels above 70, indicating overbought conditions. That doesn’t necessarily mean there will be a pullback. As long as the trend remains positive, a move higher to the intraday swing high at 7.2672 may be possible.
