Fundamental
Overview
The USD came under some
pressure at the start of last week following the US CPI report as the data came
mostly in line with expectations. In the following days though, we got some
hottish data with the US PPI beating expectations by a big margin, the US
Jobless Claims improving further and the inflation expectations in the UMich
survey surprising to the upside.
Overall, we ended the week
basically flat on the US dollar as the aggressive dovish expectations on the
Fed got trimmed a bit. Nevertheless, given the overreaction from the Fed
members to the last soft NFP, a September cut looks unavoidable now and only a
hot NFP report in September might get us to a 50% probability (although it
would certainly diminish expectations for rate cuts after the September one).
The focus has now switched
to Fed Chair Powell’s speech at the Jackson Hole Symposium on Friday. Traders
will be eager to see if he changes his stance as well. Most likely though, he
won’t pre-commit to anything and just reiterate that they will decide based on
the totality of the data.
On the AUD side, the RBA
cut interest rates by 25 bps as widely expected but didn’t offer much in terms
of forward guidance, although their focus switched more towards the labour
market. The latest employment report missed by a little margin on the headline
number but overall the data was good. The market is seeing 33% probability of a
rate cut at the upcoming meeting with a total of 35 bps of easing expected by
year-end.
AUDUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that AUDUSD has been pulling back from the highs after the hottish US data
in the final part of last week. There’s not much we can glean from this
timeframe as the price is now trading in the middle of the two key levels: the
top trendline and the support zone around the 0.6350 level. We need to zoom
in to see some more details.
AUDUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that the price is now at the key support zone around the 0.6480 level. The
buyers will likely continue to step in around these levels with a defined risk
below the support to position for a rally into the top trendline. The sellers,
on the other hand, will look for a break lower to start targeting the 0.6420
low and the 0.6350 support next.
AUDUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, there’s
not much else we can add here as the buyers will look for a rally from the support zone, while the sellers will look for a break lower to pile in for new lows. On an intraday basis, a break above the 0.65 handle might see the buyers increase the bullish bets into the 0.6522 level next. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrowwe
have Fed’s Waller speaking and the FOMC meeting minutes. On Thursday, we get
the Australian and the US Flash PMIs as well as the US Jobless Claims figures.
Finally, on Friday, we conclude the week with Fed Chair Powell speech at the
Jackson Hole Symposium.
This article was written by Giuseppe Dellamotta at investinglive.com.