Australian Dollar, AUD/USD, Iron Ore, President Xi, Japanese CPI – Discussion Items
- The Australian dollar fell against the US Dollar as the market turned to risk -taking
- The 2022 BRICS Summit will begin today in virtual format
- AUD/USD looks poised for further weakness above the main trend line support
Asia-Pacific Outlook Friday
Asia-Pacific market set to open higher after a sunny overnight session on Wall Street. The New York trading session saw riskier assets rise, with all three major U.S. equity indices posting gains. The high-beta Nasdaq-100 (NDX) index outperformed, closing 1.47% higher. Bitcoin prices rose more than 3%, in line with positive market sentiment. Traders were unaffected by negative economic data, with S&P Global PMI data for the US in June missing estimates, despite remaining in expansionary territory.
Activity in the foreign exchange market, however, is not in line with what the equity market communicates. The U.S. dollar, which typically strengthens amid risk-aversion movements, rose against its risk-sensitive peers, such as the Australian Dollar. The strength of the greenback emerged after Treasury sellers disappeared at noon, pushing yields moderately higher.
The Japanese yen may see little volatility today on the release of Japanese inflation data for May. Analysts expect to see core inflation — a move that eliminates volatile food and energy prices — cross the wire at 2.1%, according to a Bloomberg survey. The Japanese Yen is approaching its weakest level against the Dollar since 2002. Higher -than -expected inflation prints may help support the strength of the JPY, but the Bank of Japan remains opposed to a tightening policy despite a monumental fall in its currency.
Elsewhere, industrial and precious metal prices fell. The growing threat of a global recession has caused copper prices to be over 5% lower in New York. China’s sensitive iron ore prices managed to profit from President Xi’s comments. The Chinese leader reaffirmed his commitment to support economic growth at the 2022 BRICS summit. The Australian dollar remained weak despite a rebound in iron ore, but traders may take notice today and place deals on the Australian currency.
Highlights for June 24:
- Singapore – Industrial Production (May)
- Taiwan – M2 Money Supply (May)
- China – Final Current Account (Q1)
- Australia – Speech by RBA Governor Lowe
Click here to see today’s full economic calendar
AUD/USD Technical Forecast
AUD/USD gets support from the trend line formed from the October 2021 high swing. The trend line may continue to support the price, but a lower break will likely lead to the May low swing test. The psychologically important 0.7000 level remains a visible target for a price increase, in case the price rebounds. Meanwhile, the MACD and RSI oscillators remain negative.
AUD/USD Daily Chart
Charts made with TradingView
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwater on Twitter