Australian Dollar, AUD / USD, Wall Street, Market Sentiment -Talking Points
- Asia-Pacific stocks may see a boom Wall Street performance
- The Bank of Canada, as the first major central bank, took a tangible step to tighten policy
- AUD / USD rises overnight but struggles with persistent levels of resistance
Thursday’s Asia-Pacific outlook
In the Asia-Pacific markets, the strength seen on Wall Street may spread. U.S. stock markets rebounded on Wednesday after a two-day loss, with small-cap stocks pushing up fees. The Russell 2000 index rose an impressive 2.35% at the close, while volatility pulled back, as evidenced by a 6.32% decline in the VIX volatility index. Investors have focused on profits in the middle of a fairly easy week in the economic calendar.
Earnings have been mainly positive, helping to lift market sentiment as equities trade around an all-time high. Bank income has been positive, strong trading revenues and a better than expected economic reopening. Investors are now anxious about next week’s reports, with several of Wall Street’s more expensive ones planning to report quarterly data. Netflix, one of the first mega-capital technology stocks to report earnings, fell more than 7% on Wednesday after a lack of subscribers.
The Central Bank of Canada (BoC) interest rate decision peg Loonie strengthened as the central bank announced a rebound in the amount of government debt to be purchased. Some had expected a QE cone, but this was far from certain, especially given the recent rise in Covid cases in Canada. The decision marks a major step in easing the tight monetary policy in response to the global pandemic.
Today’s session is trivial for any high-impact economic event, but Hong Kong and Taiwan are releasing unemployment data. Thailand will also publish trade data for March. The Australian dollar was an overnight winner against great peers, following a better-than-expected retail printing. However, the optimistic mood on Wall Street seemed to play a bigger role in the rise of the Aussie Dollar.
Following Foreign Minister Marise Payne’s early decision on Thursday, the Australian dollar lowered two transactions involving China’s seat belt and road initiative in a fresh headwind, according to a Reuters report. This move is likely to worsen Australia’s already tense relations with China and could even lead to a formal retaliation.
AUD / USD technical outlook
Despite higher overnight movement, AUD / AUDUSD the bulls continue to fight to overcome the 0.7750 level decisively, as indicated by the red horizontal line in the diagram below. However, the 50-day Easy Moving Average (SMA) seems to strongly support the downsides. The price may continue to vary between these two levels. A pause on both sides can be seen watching, given the couple’s several days of consolidation.
AUD / USD daily chart
The chart has been created TradingView
AUD / USD COMMERCIAL ASSETS
– Wrote DailyFX.com analyst Thomas Westwater
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