The miss in the US CPI
report triggered a big selloff in the USD, but the greenback came back pretty
fast as the US data kept on surprising to the upside with the last week US Initial Claims falling back to record low levels
confirming once again the strength of the labour market. The US PMIs yesterday showed a mixed picture though with
the Services PMI missing expectations, although remaining in expansionary
territory, and the Manufacturing PMI jumping from 46.2 to 49.0 although still
in contraction.
The RBA, on the other hand,
kept its cash rate unchanged with the usual hawkish comments and the promise of
doing more if the data suggests so. In fact, the recent RBA meeting minutes showed that there was a strong case
for a rate hike but the central bank decided that holding steady was a better
choice and they will reconsider at the August meeting. The data for now points
to another rate hike as the Australian Jobs report last week surprised again to the
upside.
AUDUSD Technical Analysis –
Daily Timeframe
AUDUSD Daily
On the daily chart, we can see that AUDUSD couldn’t
break above the 0.69 resistance again
and sold off all the way down to the 0.6720 level basically erasing all the
gains after the miss in the US CPI report. The price has bounced on the red 21 moving average and it’s
now testing the resistance at 0.6781.
AUDUSD Technical Analysis –
4 hour Timeframe
AUDUSD 4 hour
On the 4 hour chart, we can see that we have a good
resistance level at 0.6781 where we can also find the 50% Fibonacci retracement level
for confluence. We
should see the sellers leaning on this level with a defined risk above the
resistance and target the 0.67 support first, and upon a breakout, the 0.6563
level. The buyers, on the other hand, will need the price to break above the
resistance to pile in and target the 0.69 handle again.
AUDUSD Technical Analysis –
1 hour Timeframe
AUDUSD 1 hour
On the 1 hour chart, we can see more closely
the key resistance to watch. This is where the market should decide where it’s
going to go in the next days or weeks. Above the resistance, the bias is
bullish, while below the level it’s bearish.
Upcoming Events
Today we have the US
Consumer Confidence report. This report is usually not a market mover, but if
we get some big surprise, we should see the market reacting to it. Tomorrow, we
will see the latest inflation figures for Australia, and they will be decisive
for the next RBA meeting. Later in the day, the Fed is expected to hike by 25
bps, but the market will want to see if there are any hints to something else
or they just reaffirm their data dependency. On Thursday, the US Jobless Claims
is likely to lead to more USD strength if the data beats expectations and some
weakness if the data misses. Finally, on Friday, we will see the latest US PCE
and ECI reports with the market likely to be more focused on the wages data
given the tightness of the labour market.