Australian Dollar, AUD/USD, US Dollar, PMI, RBA Minutes, Trend – Talking Points
- The Australian Dollar seems to be treading water for now
- RBA assembly minutes present inflation forecasts which are underneath scrutiny
- Is the development in play, or will a breakout present AUD/USD path?
Recommended by Daniel McCarthy
How to Trade AUD/USD
The Australian Dollar has began this week consolidating with firming PMI knowledge and RBA assembly minutes being launched at the moment.
The Jibun Bank composite PMI got here in at 49.2 for February in opposition to 48.2 prior and though it reveals an enchancment, it stays on the contractionary aspect of fifty.
The RBA assembly minutes revealed most issues that had been already recognized by the market. They mentioned, “Based on a technical assumption that the cash rate rises to 3¾ per cent over time, headline inflation was expected to decline to 4¾ per cent by the end of 2023.”
The futures market is pricing in a money fee peak of 4.20% later this yr.
There are many sunny facets to the outlook for the Australian financial system, however a possible drawback might lie in the truth that CPI is outstripping each PPI and wage-price inflation.
Year-on-year CPI to the tip of 2023 was 7.8% and PPI for a similar interval was 5.8%. Tomorrow will see the Australian Bureau of Statistics (ABS) launch the Wage Price Index. A Bloomberg survey of economists is forecasting a rise of three.5% over the yr to the tip of December.
While the sharpest a part of the financial coverage axe is in housing mortgages, companies additionally face greater funding prices when coverage is being tightened.
Looking on the aforementioned inflation gauges, it might counsel that companies are at present in a position to move on growing enter prices at a quicker fee than they’re experiencing.
This could be a priority for the RBA when entrenched/embedded inflation expectations have been highlighted as a problem.
If customers can bear the brunt of upper enter prices and increasing revenue margins for corporations, it might counsel that shopper value pressures are nonetheless constructing.
If the primary quarter CPI is available in scorching, once more, the RBA might need to re-assess its outlook for charges and this may occasionally have penalties for AUD/USD.
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AUD/USD TECHNICAL ANALYSIS
The Australian Dollar has steadied this week and it stays inside an ascending development channel.
AUD/USD had a glance decrease final Friday because it briefly dipped under a short-term ascending development line It discovered assist earlier than a longer-term ascending development line that varieties the decrease band of the ascending development channel.
The 200-day easy shifting common (SMA) at present lies close to that development line and should proceed to offer assist round 0.6800. The low seen final week at 0.6812 may additionally lend assist.
A collection of breakpoints and prior lows within the 0.6855 – 0.6877 space is also a assist zone.
The rally this week has struggled to beat the 260-day SMA at present at 0.6915. A clear break above the 260-day SMA or under the 200-day SMA, may see momentum evolve in that path.
On the topside, resistance could possibly be provided on the breakpoints and former peaks of 0.6984, 0.6996, 0.7011 and 0.7030. The 21-day SMA is at present close to 0.6984 and should provide resistance.
The RBA assembly minutes could be learn right here.
AUD/USD DAILY CHART
Chart created in Buying and sellingView
— Written by Daniel McCarthy, Strategist for DailyFX.com
To contact Daniel, use the feedback part under or @DanMcCathyFX on Twitter