Australian Dollar, AUD / USD, Iron Ore, President Xi, Japan CPI – Talking Points
- Australian dollar falls against US dollar as markets move to risk-taking
- The 2022 BRICS Summit kicks off today in virtual format
- AUD / USD looks ready for further weakness over key trendline support
Friday’s Asia-Pacific Outlook
Asia-Pacific markets will open higher after a rosy overnight session on Wall Street. The New York trading session saw risk assets climb, with all three major U.S. stock indices making gains. The high-beta Nasdaq-100 index (NDX) performed better, closing 1.47% higher. Bitcoin prices rose by more than 3%, in line with the positive market sentiment. Traders were not affected by negative economic data, with S&P Global PMI data for the US in June missing estimates, although they remained in expansion territory.
However, activity in the foreign exchange market did not correspond to what stock markets communicated. The US dollar, which typically strengthens amid risk movements, has risen against its risk-sensitive counterparts, such as the Australian dollar. Green-back strength appeared after treasury sellers disappeared that afternoon, causing yields to rise modestly higher.
The Japanese yen may see some volatility today with the release of Japan’s inflation data for May. Analysts expect core inflation – a measure that removes volatile food and energy prices – to cross the threads at 2.1%, according to a Bloomberg survey. The Japanese yen is close to its weakest level against the dollar since 2002. Higher-than-expected inflationary pressures may help support the strength of the JPY, but the Bank of Japan has remained challenging against tougher policies despite the monumental collapse of its currency .
Elsewhere, industrial and precious metal prices have fallen. The growing threat of a global recession has caused copper prices to fall more than 5% lower in New York. Chinese-sensitive iron ore prices have managed to win on comments from President Xi. The Chinese leader reaffirmed his commitment to support economic growth at the 2022 BRICS summit. The Australian dollar remains weak despite the recovery in iron ore, but traders can take note today and place a bid on the Australian currency.
Important events for June 24:
- Singapore – Industrial Production (May)
- Taiwan – M2 Money Stock (May)
- China – current account final (Q1)
- Australia – RBA Governor Lowe’s speech
Click here to see today’s full economic calendar
AUD / USD Technical Forecast
AUD / USD found support from a trend line formed from the October 2021 swing high. That trend line may still support prices, but a lower break will likely lead to a test of the May swing low. The psychologically important 0.7000 level remains a visible target for bulls, should prices recover. Meanwhile, the MACD and RSI oscillators remain negative.
AUD / USD Daily Chart
Graph created with TradingView
— Written by Thomas Westwater, Analyst for techlives.in
To contact Thomas, use the comments section below or @FxWestwater on Twitter