AUDUSD currency pair is on shaky ground and has fallen quickly by 45 pip.
After the Australian inflation statistics disappointed early on Wednesday. The AUDUSD currency pair is on shaky ground and has fallen quickly by 45 pip. The shift in market sentiment ahead of the Federal Reserve’s (Fed) monetary policy meeting. And recent negative stories from China may be strengthening the pessimistic attitude.
Aussie In June, the monthly CPI was in line with expectations at 5.4% YoY, while the quarterly CPI and RBA Trimmed Mean CPI disappointed.
In Australia, the Consumer Price Index (CPI) for the second quarter of 2023 declines in the headline category. The Reserve Bank of Australia’s (RBA) Trimmed Mean CPI came in at 1.0% compared to 1.1%. Market predictions and 1.2% prior for the aforementioned period, down from 1.0% QoQ versus 1.0% predicted and 1.4% prior. Furthermore, the June Monthly CPI is in line with analyst predictions of 5.4% versus 5.6%.
News reports earlier in the day that suggested growing tensions between the US and China. Along with the pre-Fed consolidation weighed on the AUDUSD market. Nevertheless, according to Reuters, the US Senate’s 100 members supported the NDAA amendment by a vote of 91 to 6. Therefore, legislation forcing US businesses to disclose their investments in Chinese technologies like semiconductors. And artificial intelligence is supported by policymakers. It’s interesting to note that the Australian dollar and Chinese yuan gained the most ground in two weeks the day before thanks to optimistic speeches from the Politburo meeting of the Chinese Communist Party and the National Development and Reform Commission (NDRC). Which suggested additional stimulus from Beijing and boosted sentiment.
After a two-day rally, challenges to mood prompt purchasers of the Australian pair.
The depressing numbers from the big economies, which signal the end of the rate hike trajectory. At the main central banks, may also have earlier added strength to the AUDUSD upward and favored the risk-on mindset. The International Monetary Fund’s (IMF) modification of its global growth projections upward also aided the pair prices. And the risk-on attitude. It also appeared from Reuters’ news. That China’s state banks were defending the Yuan (CNY) by selling US dollars. The pair’s prices have risen as a result.
The majority of US data, on the other hand, came in good but failed to excite the DXY bulls. Nonetheless, the US Conference Board (CB) Consumer Confidence increased to 117.0 in July from 110.10 before (revised) against market expectations of 112.10. According to the poll results, one-year consumer inflation estimates fell to 5.7%, while the Present Situation Index and Consumer estimates Index increased to 160.0 and 88.3 in that month. However, the US Housing Price Index for May duplicated the 0.7% MoM rise vs the 0.2% projected by experts, while the S&P/Case-Shiller Home Price Indices similarly repeated the -1.7% YoY data for the same month versus the -2.2% expected.
In this context, S&P500 Futures print Even while Wall Street benchmarks closed higher for the second day in a row, they suffered minor losses. Nonetheless, US 10-year Treasury bond rates soared to their highest levels in three weeks before settling near 3.89% on Tuesday.
Powell’s speech will be essential for providing direction because the Fed’s 0.25% rate hike has already been factored in.
Following the first market reaction to Australian inflation, traders of the AUDUSD pair should keep a watch on risk triggers for unambiguous directions. The cautious atmosphere ahead of the Federal Open Market Committee (FOMC) monetary policy meeting pronouncements, on the other hand, may limit the Aussie pair’s advance. It should be emphasized that rumors of the US central bank raising interest rates by 0.25% is loud and obvious, thus statements from Fed Chairman Jerome Powell will be critical to observe for clear guidance.
Technical Analysis
The AUDUSD pair’s repeated failures to close above a one-week-old falling resistance line, which was at 0.6800 by press time, as well as the double tops near the 0.6900 round figures, kept the bears optimistic despite slow MACD and RSI signals.
A confluence of the 21-DMA and the 200-DMA, on the other hand, provides a bottom beneath the Aussie price around 0.6730-25.
