Is the trend still our friend on AUD/USD?
The upcoming U.S. preliminary consumer sentiment index might make or break this pair’s climb before the trading week closes.
Before moving on, ICYMI, yesterday’s watchlist checked out USD/CAD’s potential head and shoulders pattern. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. initial jobless clams came in at 187K vs. 207K estimate to reflect slower pace of job losses
Philly Fed index dipped from -10.5 to -10.6 in December vs. estimated improvement to -6.6
FOMC member Bostic said that they are open to cutting rates in July if there is convincing evidence of slower inflation
Houthi terrorists launched two ballistic missiles at a U.S.-owned commercial shipping vessel marking its third attack in a row this week
New Zealand visitor arrivals slumped 1.5% m/m in November, following earlier upgraded 6.7% decline
BusinessNZ manufacturing index fell from 46.5 to 43.1 in December to reflect sharper pace of industry contraction
Japanese national core CPI fell from 2.5% y/y to 2.3% as expected in December
Japanese Finance Minister Suzuki says they are watching FX moves carefully, keeping traders on edge for potential yen intervention
China’s largest brokerage Citic restricted short sales and raised margin requirements for institutional clients after “window guidance” from regulators
Japanese tertiary industry activity fell 0.7% m/m vs. estimated 0.2% uptick in November
Price Action News
Yen pairs had been stuck in consolidation throughout the previous day’s trading sessions, before bearish vibes returned during today’s Asian market hours.
A fresh set of weaker than expected data from Japan reminded traders that the BOJ isn’t likely to opt out of its negative interest rates policy in the near-term.
However, the Japanese currency managed to take a breather from its dive when Finance Minister Suzuki noted that they are watching yen price action closely, suggesting that yen-tervention might happen anytime soon.
It wasn’t long before the yen resumed its slide, chalking up its largest losses against the Australian dollar and British pound intraday.
Upcoming Potential Catalysts on the Economic Calendar:
U.K. retail sales at 7:00 am GMTECB head Lagarde’s speech at 10:00 am GMTCanadian headline and core retail sales at 1:30 pm GMTU.S. preliminary UoM consumer sentiment index at 3:00 pm GMTU.S. existing home sales at 3:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! ️
Reports that China’s largest brokerage Citic placed restrictions on short sales weighed on riskier currencies like AUD earlier today.
Authorities are apparently growing increasingly concerned about the property sector debt blowout, prompting them to issue guidance to financial institutions to support the Chinese stock market.
This has taken AUD/USD down from its highs near the .6600 major psychological mark down to the short-term ascending trend line support.
The Fibonacci retracement tool applied on the latest swing low and high shows that this coincides with the 50% level, as well as a former resistance zone.
In addition, this lines up with the 100 SMA dynamic inflection point, which adds to its strength as support. This faster-moving SMA is above the 200 SMA to signal that the uptrend is likely to gain traction and possibly take AUD/USD back up to R1 (.6590) near the swing high.
Don’t forget that the U.S. UoM preliminary consumer sentiment is still up for release during today’s New York session and might bring additional moves for this dollar pair.
A significant improvement in consumer optimism could translate to stronger spending activity down the line, which might be seen as bullish for the dollar on reinforced hopes that the Fed would delay rate cuts.
On the other hand, a lower than expected read could highlight weak spots in the U.S. economy and reignite easing expectations once more. Just make sure you account for the average AUD/USD volatility of 55.3 pips when trading this one!