Oct 31, 2022

VOT Research Desk

After an optimistic start to the crucial week, the AUD/USD reversed from its intraday high with a 15-pip drop to 0.6402, as China’s activity statistics roused bearish.

By the time of press, the pair’s most recent weakness prints the three-day downtrend. In October, China’s official NBS Manufacturing PMI fell to 49.2 from 50.0 predicted and 50.1 in September. In addition, the Non-Manufacturing PMI fell to 48.7 from 51.9 market expectations and 50.6 earlier readings.

In line with market expectations, Australia’s September retail sales data earlier in the day were revised upward by 0.6%.In other markets, the AUD/USD movements are being hampered by sluggish Treasury rates, marginally offered US stock futures, and market jitters ahead of this week’s monetary policy meetings of the US Federal Reserve (Fed) and the Reserve Bank of Australia (RBA).

As a result of Macau locking down a casino resort, China’s covid problems also get worse. The worries caused by Russia’s withdrawal from the grain deal may be on the same track.

Following an attack on its Black Sea fleet, Russia, which invaded Ukraine on February 24, halted its participation in the Black Sea agreement on Saturday for a “indefinite term,” according to Reuters.

As a result, Russia could no longer “guarantee the safety of civilian ships” travelling under the agreement.

In the midst of these plays, US Treasury yields are directionless following a depressing report, and US equities futures show modest losses despite Dow Jones’ preparation for the largest monthly increase since 1976.

Additionally, the US Dollar Index (DXY), which is currently up 0.10% intraday, shows a three-day rise at 110.80.

Moving on, traders of the AUD/USD currency pair may find some amusement in the US second-tier activity statistics before the release of the RBA’s decision on Tuesday.

The Aussie pair may reverse the most recent downturn if the Australian central bank surprises the markets by announcing a higher-than-expected 0.25% increase in the benchmark rate.

AUD/USD Technical Analysis

The AUD/USD pair may struggle to entice the bears without shattering the 0.6370-60 support confluence, which consists of the 21-DMA and a two-week-old ascending trend line.

Oct 28, 2022

VOT Research Desk

The AUD/USD pair has continued to rise over the intraday resistance level of 0.6470 despite conflicting signs from the market’s mood.

In the absence of a positive trigger, S&P500 futures are hanging onto their morning losses, and 10-year US Treasury rates have risen again after falling to nearly 3.93%.

Following a sharp reversal on Thursday, the US dollar index (DXY) is struggling in the early European session at 110.40.

Strong Gross Domestic Product (GDP) figures from July to September caused the DXY to soar as a result. The US GDP for the third quarter came in at 2.6%, above expectations of 2.4%. Additionally, a change to an expansionary mode following an economic contraction in the first half of CY2022 resulted in a restoration of investor confidence in the outlook for the economy.

Investors’ attention will be drawn to the Federal Reserve’s (Fed) interest rate policy in the next week.

 The likelihood of a 75 basis point (bps) rate increase by the Federal Reserve (Fed) is 82.85%, according to the CME Fed Watch tool.

After a decline in consumer spending during the third quarter, the chances of a 75 basis point rate increase have been reduced.

This suggests that the market is not far from reaching inflationary pressures depletion. In Australia, a historic increase in inflation, reported this week at 7.3%, may influence the Reserve Bank of Australia’s (RBA) determination of the magnitude of the increase in the Official Cash Rate (OCR). RBA Governor Philip Lowe might continue to struggle with the decision of whether to resume his 50 bps rate hike cycle or opt for more frequent, smaller increases.

Oct 27, 2022

VOT Research Desk

The AUD/USD pair declines by almost 100 pip from a three-week high reached earlier on Thursday, but the intraday decline encounters some resistance close to the 0.6425 area.

During the early North American session, the pair swiftly makes a few pip gains and is now trading in the range of 0.6475-0.6480, albeit down more than 0.30% on the day.

The US dollar makes a decent intraday recovery from its lowest point since September 20 and ends up being a major contributor pushing the AUD/USD pair down.

After the Advance US GDP data revealed that the largest economy in the world increased by a 2.6% annualized pace during the third quarter, exceeding predictions for a print of 2.4%, the USD has maintained its bid tone.

This is a significant turnabout. However, this was partially offset by the GDP price index increasing by just 4.1%, which was significantly less than the 5.3% forecast and less than half of the 9.0% increase in the prior quarter.

This may be interpreted as the first indication of a moderated inflationary pressure, which fuels the idea that the Fed may tone down its hawkish outlook.

The US Treasury bond yields went down another stride as a result of the anticipation. This, together with the risk-on drive, caps the safe-haven dollar and gives the risk-averse Aussie some support. In addition, the better consumer inflation data released on Wednesday should support growing forecasts for a more aggressive Reserve Bank of Australia policy tightening, which should benefit the AUD/USD pair.

As a result, any significant pullback may still be viewed as a buying opportunity and is more likely to be transient. However, as attention turns to the FOMC meeting the following week, the upside potential appears to be constrained.

Oct 25, 2022

VOT Research Desk

In the Tokyo session, the AUD/USD pair gave up its retreat move to a level close to 0.6350. The Aussie dollar is under stress because to China’s pessimism, which is influenced by Jinping.

Despite a little decline in S&P500 futures following back-to-back positive settlements, the risk-on impetus is still strong.

The US dollar index (DXY), which had a muted beginning in Tokyo, is currently striving to regain the key threshold of 112.00.Due to a bullish market, the 10-year US Treasury rates have decreased to 4.21%.

According to the CME FedWatch tool, there is a 95% likelihood that the Federal Reserve (Fed) will raise interest rates for a fourth time in a row by 75 basis points (bps). According to a Reuter’s poll on the Fed’s interest rate forecasts, the institution will announce a fourth consecutive 75 bps rate increase.

According to other findings of the Reuters survey, the central bank shouldn’t take a break until inflation is roughly half its present level. Without a question, the Fed’s aggressive rate raise cycle is also encouraging the possibility of an impending recession.

Fears of a recession have grown dramatically after US Treasury Chief Janet Yellen said that one “cannot rule out danger,” according to MSNBC news.

The US Gross Domestic Product (GDP) numbers released on Thursday will now take centre stage. The annualised GDP is anticipated to increase considerably to 2.4% from the previously estimated fall of 0.6%.

The extraordinary third term for Xi Jinping as president of China has alarmed the aussie bulls on the Australian front. China’s growth forecasts are in jeopardy, which has an effect on Australia’s trade estimates.

In addition, information from the Australian Consumer Price Index (CPI) is becoming increasingly popular. Estimates predict that annual headline inflation will increase from the previous release’s 6.1% to 7.0%.