AUD/USD looks ready to bounce from a short-term area of interest!
Will we see a trend continuation before and/or after the FOMC‘s meeting minutes release?
Before moving on, ICYMI, yesterday’s watchlist looked at spot gold’s (XAU/USD) trend pullback opportunity ahead of RBA’s meeting minutes release. 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:
On Monday, British Prime Minister Rishi Sunak said he plans to focus on tax cuts following a recent decline in inflation.
On Monday, Bank of England Governor Andrew Bailey warned that the BOE may have to hike interest rates again
New Zealand’s trade deficit shrank from 2.43B NZD to 1.71B NZD as imports (-14% y/y) fell faster than exports (-9.3% y/y) in October
In a panel discussion, RBA Gov. Bullock sounded hawkish by saying that “Inflation is a crucial challenge over the next one to two years.”
RBA’s meeting minutes showed that the November rate hike helped fight the “risk that a larger monetary policy response might be required in coming months” instead of being the dovish hike that traders initially priced in
New Zealand’s credit card spending dipped by 2.9% m/m in October (+2.8% m/m previous)
Switzerland’s trade surplus narrowed from 6.2B CHF to 4.60B CHF in October as exports (-10.7% m/m) dropped faster than imports (-4.9% m/m)
U.K. public borrowing picked up from 13.7B GBP to 14.0B GBP in October and marked the second-highest October borrowing on record
Price Action News
There were not a lot of fresh catalysts in the markets today, which meant that traders had more time to unwind their long USD positions.
The safe-haven Japanese yen saw some of the bigger moves ahead of potential market-moving data releases like the FOMC meeting minutes and Europe’s PMI releases. It may have also helped that some USD/JPY traders took cues from USD/CNH, which also reflected the overall USD weakness.
JPY is in the green against ALL of its major counterparts, but it’s especially strong against USD, EUR, and CHF so far today.
Upcoming Potential Catalysts on the Economic Calendar:
U.K.’s monetary policy report hearings at 10:15 am GMT
Canada’s CPI reports at 1:30 pm GMT
U.S. existing home sales at 3:00 pm GMT
ECB President Lagarde to give a speech at 4:00 pm GMT
FOMC meeting minutes at 7:00 pm GMT
Australia’s leading index at 11:30 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
We haven’t seen a lot of top-tier economic data releases yet but RBA Governor Bullock’s hawkish comments kept AUD traders busy earlier today!
In case you missed it, RBA’s head honcho hinted that high inflation could be a “crucial challenge” in the next year or two and that an uptick in inflation expectations may be a “problem.”
Meanwhile, the continued unwinding of long USD positions has boosted the Chinese yuan and also indirectly helped AUD’s prospects.
Unfortunately for AUD/USD bulls, the pair still turned lower from the R1 (.6580) Pivot Point level. That tracks with half of AUD/USD’s average daily volatility!
AUD bulls who believe that RBA’s hawkishness and USD-selling would eventually extend AUD/USD’s uptrend can check out the .6560 previous resistance zone that conveniently lines up with the 100 SMA in the 15-minute time frame.
If AUD/USD bounces from the inflection point, then we can look at a possible return to the pair’s intraday highs if not new weekly highs.
But if the R1 Pivot Point line ends up being today’s intraday highs and AUD/USD sees bearish momentum in the next trading sessions, then you may consider a potential short-term reversal for AUD/USD. Just make sure that you’re seeing a breakout and not a fakeout!
AUD/USD’s next direction may depend on potential catalysts like the FOMC meeting minutes and Canada’s CPI reports due in the U.S. session.
Reports that support “peak rate” bets for the major central banks may extend the risk-friendly trading environment and push AUD/USD higher, while risk aversion could inspire deeper pullbacks or short-term reversals in the next trading sessions.
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