Hawkish RBA Unable to Arrest Slide, 200-Day MA in Focus

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Most Read: US Dollar Bumped Higher by Hawkish Fed and Blistering PPI. Higher USD?

AUDUSD FUNDAMENTAL BACKDROP

AUDUSD continued its transfer to the draw back within the Asian session because the greenback index prolonged good points. Hawkish commentary from RBA Governor Lowe was seemingly drowned out by a number of equally hawkish Federal Reserve policymakers.

Comments from Reserve Bank of Australia (RBA) Governor Lowe didn’t arrest the slide in AUDUSD. Governor Lowe cautioned that the RBA are retaining an open thoughts, and their opinion is that additional fee hikes are wanted. Lowe additionally said that rates of interest aren’t on a predetermined path because it takes 18-24 months for fee hikes to be felt within the economic system. The chance for an extra 25bps hike on the RBA assembly on March 7 now rests at 76% (as proven beneath).

SOURCE: REFINITIV

Federal Reserve policymakers in the meantime continued their hawkish rhetoric yesterday which probably drowned out the feedback from RBA Governor Lowe. Fed policymakers Loretta Mester and James Bullard each said that they might not rule out a 50bps hike on the Fed’s March assembly. Bullard and Mester’s feedback had been in response to US PPI knowledge which recorded its largest improve since June 2022. The latest strikes in AUDUSD are largely attributable to the US greenback as we proceed to see repricing of the Fed Funds Peak fee with this week’s upbeat financial knowledge out of the US additional strengthening the narrative.

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Looking forward to the remainder of the day we’ve got a comparatively quiet US financial calendar with Federal Reserve policymaker Thomas Barkin talking and the CB Leading Index for January out of the US. Neither of which is anticipated to offer markets with any vital shocks forward of the weekend.

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TECHNICAL OUTLOOK

The continued promoting strain on AUDUSD may very well be linked to yesterday’s each day candle which closed beneath the 50-day MA. The pair has failed to seek out acceptance above the 0.7000 degree regardless of briefly breaking above it on January 23. Further draw back appears the trail of least resistance at this stage, nevertheless the 200-day MA rests just under present worth at 0.68090 and will present momentary aid. A bounce of the 200-day MA may result in a retest of the 50-day MA earlier than the following leg to the draw back and a 3rd contact of the ascending trendline from October 2002 lows.

AUD/USD Daily Chart – February 17, 2023