Market news
09.08.2022, 23:14

AUD/USD bears trying hard to keep reins below 0.7000, US/China inflation eyed

  • AUD/USD extends Tuesday’s downbeat performance, stays pressured around intraday low.
  • Fears of economic slowdown, pre-inflation anxiety weigh on the risk-barometer pair.
  • Aussie NAB data failed to impress bulls amid downbeat equities, rebound in yields.
  • Firmer China CPI may offer intermediate help but US inflation is crucial amid strong jobs report, hawkish Fedspeak.

AUD/USD remains depressed around the intraday low near 0.6955 as sellers keep reins for the second consecutive day ahead of the key US inflation data. In addition to the US Consumer Price Index (CPI), headline inflation numbers from Australia’s key customer China also adds to the pre-data caution. Additionally, fears of economic slowdown and the hawkish Fed bets are extra catalysts that weigh on the Aussie pair during the early Asian session on Wednesday.

Market sentiment turned sour after the firmer US data joined Russia’s further tightening of energy supplies, which in turn weighed on the AUD/USD prices during the European session on Tuesday.

That said, US Nonfarm Productivity improved to -4.6% during the second quarter (Q2), -4.7% expected and -7.4% prior, whereas the Unit Labor Cost increased to 10.8% from 12.7% prior and 9.5% market consensus during the said period. On Tuesday, Russia reportedly suspended oil flows via the southern leg of the Druzhba pipeline, amid transit payment issues.

It’s worth noting that Fed's St. Louis president James Bullard said on Tuesday, per Reuters, that he wants rates at 4% by the end of the year. This joins recently firmer interest rate futures suggesting nearly 70% odds favoring the 75 basis points (bps) of a Fed rate hike in September.

Against this backdrop, the US 10-year Treasury yields regained upside momentum while closing the day around 2.779% while the Wall Street benchmarks also posted losses by the day’s end.

Earlier on Tuesday, National Australia Bank’s Business Conditions and Business Confidence data for July printed upbeat results as the former rose to 20, versus 15 market consensus and 13 prior. Further, Business Confidence matched 7 forecasts while rising past 1 prior. On the contrary, Australia’s Westpac Consumer Confidence Index for August eased to 81.2, below 83.8 prior. Also, China marked a 20.1% YoY gain in passenger car sales during July, per china auto industry body CPCA.

Looking forward, AUD/USD may witness an intermediate rebound should China’s CPI and Producer Price Index (PPI) data for July match upbeat forecasts. However, major attention will be given to the US CPI, expected to ease to 8.7% from 9.1% on YoY, as well as the CPI ex Food & Energy which is likely to rise from 5.9% to 6.1%. Given the hawkish expectations from the Core CPI, the US dollar may witness further upside in case of the firmer inflation print.

Also read: US CPI Preview: It is the hard core that counts, five scenarios for critical inflation data

Technical analysis

AUD/USD holds onto the pullback from a downward sloping resistance line from April 20, close to 0.7015 by the press time. The same joins the impending bear cross of the MACD and steady RSI to direct sellers towards the 50-DMA retest, around 0.6850 at the latest.

 

© 2000-2024. All rights reserved.

This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

The information on this website is for informational purposes only and does not constitute any investment advice.

The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.

AML Website Summary

Risk Disclosure

Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.

Privacy Policy

Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.

Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.

Bank
transfers
Feedback
Live Chat E-mail
Up
Choose your language / location