US DOLLAR, FED, PCE INFLATION, AUD / USD – TALKING POINTS:
- US dollar stable despite the lack of GDP in the second quarter, risk guidelines according to Amazon guidelines
- The outlook for the Federal Reserve may lack commitment before PCE data
- AUD / USD may continue the downward trend when the critical resistance is close to 0.74
The US dollar did not bother much, as GDP in the second quarter was lower than expected yesterday. The report showed that production grew by 6.5 percent a year in the three months to June, while analysts showed 8.5 percent.
The currency was similarly immobile as the second-quarter earnings reports of the main pandemic winners in the technology sector include failed instructions that triggered risk aversion in the stock space. The unsurpassed liquidity of the benchmark often attracts the demand for shelter during market demand.
Maybe the market is still digesting the July instructions FOMC policy statement. Like previously noted, the subsequent pricing sounded broadly “stupid”, but the content of the Fed’s story seems to carefully reflect policy makers markets to adapt to the impending removal of incentives.
With this in mind, traders may be reluctant to show a directional commitment, as the focus is on the June PCE data. The Fed’s preferred measure of inflation is expected to bring price growth to 3.7 percent, the highest level in three decades. Price data tend to exceed forecasts lately, opening the door to surprise.
Higher growth may lead to “stagflation”, where growth rates will return to normal as the recovery from Covid’s closure matures, but inflation will become sticky. This can create sour feelings as markets reflect on the Fed’s policy of offering such a scenario. USD renewed support.
AUD / USD TECHNICAL ANALYSIS – TO CONTINUE AUSIA DOLLAR DOWNTREND?
Australian dollar continues to float in the 0.7384-0.7413 region at supported resistance, a barrier reinforced by the declining trend line that defines the decline from mid-June. The large head and upper shoulders cut out from the beginning of the year indicate a broadly biased prejudice.
The first major support layer appears to be in zone 0.7222-44. A break below the daily closing may continue the downward trend in the H&S pattern. This setting assumes an approximate measured movement in the range of 0.7120-30.
Strengthening above 0.7413 seems to be a precondition for neutralizing the immediate selling pressure. This could start a recovery, bringing the 0.76 figure to buyers’ fingertips. However, a clear reversal of the near-term downward trend is needed in order to draw firm conclusions.
AUD /USD Daily Schedule was createdTradingView
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– Written by DailyFX.com APAC chief strategist Ilja Spivak
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