Australian Dollar, AUD / USD, RBA, Covid, China, US NFP, Falling Wedge – Hotspots
- Australian dollar seeing some risk flows after a moody US session
- Covid in Australia and China with the RBA may move Aussie Dollar
- AUD /USD The rising wedge takes shape, adding a tilting tilt to the pair
Friday ‘s outlook for Asia – Pacific
Asia-Pacific markets appear to be benefiting from a recovery in trading sentiment after higher equities Wall Street. The risk-sensitive Australian dollar wins against the shelter US dollar. Bond traders shifted away from the Treasury, raising the benchmark for a 10-year bond to 3% above New York’s closing time. The movement of the US stock, currency and government bond markets reflects a brighter mood at the end of the week.
The strength of the Australian dollar comes despite the record cases in Sydney, Australia’s most populous city. New South Wales The capital of Wales reported 262 new Covid infections on Thursday, including a number of Delta cases. The six-week closures in Sydney, joined by Melbourne and Brisbane – the next two most densely populated cities in Australia – threaten to dampen GDP growth in the coming quarters. If production contracts are concluded in the second and third quarters, the country will re-enter the technical recession after dropping out last year. That would mark the second in two years.
Elsewhere in China, occasional outbreaks have begun to become widespread city-level events, also driven by the Delta variant. Outbreaks of disease between Wuhan and Zhangjiajie challenge the Communist Party’s strict containment measures, which succeeded in the initial pandemic wave. China’s economic data has been mixed in recent weeks, leading some to fear that global growth could slow.
If China’s outbreaks deepen and lead to tighter restrictions, the Australian dollar is likely to come under severe pressure. The currency often acts as a market-favored liquid intermediary for the Chinese economy. This is because China is Australia’s largest trading partner. The Australian dollar, which rose after the Reserve Bank of Australia (RBA) kept its planned asset purchases earlier this week intact.
Speaking of RBA, today brings a fresh update statement on monetary policy. This should help shed more light on this week’s decision. RBA chief Philip Lowe will also address the government’s economic committee today. Legislators hope to put pressure on Mr Lowe’s central bank balance sheet decision.
This means that the AUD / USD may see some volatility in today’s session. At the same time, traders are preparing a U.S. non-farm payroll report, which should appear before tomorrow’s New York opening bell. Economists expect the economy to add 870,000 jobs in July, up from 850,000 in June. Better-than-expected printing may encourage some of Fed’s interest rate hikes, which could push the Australian dollar lower than the Greenback.
Source: DailyFX economic calendar
AUD / USD technical outlook:
The AUD / USD has risen moderately since its low level in July 2021, and has risen above 1% since then. A rising wedge pattern is emerging, but is putting new bear pressure on prices. The last peak of the wedge pattern reached a declining 26-day exponential moving average (EMA) after breaking the highest resistance to the September fluctuation height. With this in mind, traders should be wary of a sharp drop in the near future, especially if prices fall back close to the wedge support.
AUD / USD daily schedule
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Australian dollar trading resources
– Written by Thomas Westwater, DailyFX.com analyst
Be in touch Thomas, use the comments section below, or @FxWestwaterTwitter