Market Analysis

AUD/USD Remains Fragile as China Pressures Speculation in Iron Ore, Copper

Australian dollar, AUD / USD, iron ore, copper, treasury – call points

  • The pressure on metal prices is weighing down Australian dollar feeling
  • AUD traders today take into account the Westpac leading index in April
  • AUD / USD may continue to vary between major moving averages

Wednesday’s Asia-Pacific outlook

Asia-Pacific stocks may have problems after the increase in earnings observed on Tuesday Wall Street moved lower during the New York session. Technology stocks brought some growth, however S&P 500 and the Dow Jones Industrial Average (DJIA) closed in the red, losing 0.21% and 0.24% respectively. Before the opening bell, investors were engaged in several economic activities that were less than stars.

After strong market demand for the 2-year bond auction, Treasury revenues continued to be lower. The auction supply-to-cover ratio – used to measure the strength of demand – was 2.74. The 10-year benchmark return fell to its lowest level in several weeks as the return curve flattened. The US dollar joined the negative movement in yields, with the DXY index giving up 0.20% after the NY closing time.

Inflationary concerns will also be alleviated, which will help alleviate the problems of bond traders. Federal Reserve Vice President Richard Clarida spoke to Yahoo Finance about inflation on Tuesday, noting that “this rise (CPI) has certainly caught my attention and the attention of others.” Mr Clarida reiterated colleagues’ calls that the recent rise in inflation is largely transient.

The New Zealand Reserve Bank (RBNZ) rate today is probably the most common driver of mood during an APAC session. Traders enter a policy statement into the RBNZ that includes an updated economic forecast. The resilience of the New Zealand economy since the last policy update can be seen as an improvement in growth prospects, which could support short-term interest rate rises.

According to the consensus forecast, the RBNZ will maintain its overnight rate (OCR) at 0.25%. Although economic activity has impressed analysts in recent months, resulting in upward shifts in the political outlook, an increase in the surprise rate at this meeting is highly unlikely due to the continuing uncertainty surrounding Covid. Stephen Toplis, a member of the Shelter Board of the New Zealand Institute of Economic Research, said in a recent report:

“Tactically, RBNZ does not want to intimidate horses, but its goals are almost met, so the need to maintain the current level of incentive is rapidly diminishing.”

This morning, New Zealand reported its April trade figures, with exports and imports exceeding wires priced at $ 5.37 billion and $ 4.98 N respectively billion. Outside of New Zealand, Australia’s April Westpac index and first-quarter construction fall. The Japanese matching index should appear elsewhere.

The halt in rising metal prices is likely to have put overall pressure on the Australian dollar, with iron ore, one of Australia’s largest exports, falling by more than 20%. Commodity traders are concerned about China’s recent actions to reduce speculative asset bubbles. The People’s Bank of China (PBOC) has quietly reduced credit in the markets, trying to counter the problems of speculation in the still fragile economy. Although the global recovery narrative supports metals, a cautious approach to speculative traders is justified, with prices already multi-year.

Iron ore versus copper agenda

Iron ore vs. copper

The chart is created using TradingView

AUD / USD technical breakdown

AUD /USD made intraday movements above its 20-day simple average (SMA), but was reversed and is now trading back at 0.7750, the former resistance from early April to mid-April. This means that a 20-day SMA seems to be the key to overcoming before moving higher. Alternatively, a supportive 50-day SMA with a negative side is close to 0.7713. Further consolidation of the two main SEAs may continue in the near term.

AUD / USD daily chart


The chart has been created TradingView


– Written by analyst Thomas Westwater

Use the comments section or below to contact Thomas @FxWestwaterTwitter


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