Fundamental
Overview
Yesterday, the US PPI report came in higher than expected but the
focus was on the details that feed into the Core PCE index, which is what the
Fed focuses on. Those details were all very soft and helped to bring the early
estimates down to more benign levels. In fact, the Core PCE Y/Y is now
projected to fall to 2.6% vs. 2.8% prior. That’s good news for the Fed.
The US Dollar fell across
the board as a result and eventually the bearish momentum increased
substantially in the evening as the Trump’s tariffs saga came to an end. In
fact, the US President announced his reciprocal tariffs that could go into effect in April
but the overall tone of it wasn’t aggressive and sounded a lot like the start
of a negotiating process to bring tariffs to a fair level for everyone.
On the AUD side, it’s been
all about the US Dollar softness and with the markets now less concerned about
tariffs, the other major currencies got the green light to appreciate against
the greenback.
On the data side, the Australian Q4 CPI report recently missed expectations
across the board with the underlying inflation figures easing further and now
comfortably in the RBA’s target range on a 6-month annualised basis.
As a reminder, the RBA softened
further its stance
at the last policy decision as it nears the first rate cut. The market is now seeing
an 86% chance of a 25 bps cut in February with a total of 75 bps of easing
expected by year end.
AUDUSD
Technical Analysis – Daily Timeframe
AUDUSD Daily
On the daily chart, we can
see that AUDUSD is testing the key resistance zone around the 0.6330 level. This
is where we can expect the sellers to step in with a defined risk above the
resistance to position for a drop back into the 0.6170 level. The buyers, on
the other hand, will want to see the price breaking higher to increase the
bullish bets into the 0.65 handle next.
AUDUSD Technical
Analysis – 4 hour Timeframe
AUDUSD 4 hour
On the 4 hour chart, we can
see that we have an upward trendline
defining the bullish momentum. If we get a pullback into it, we can expect the
buyers to lean on the trendline with a defined risk below it to position for
the break above the resistance. The sellers, on the other hand, will want to see
the price breaking lower to increase the bearish bets into the 0.6170 level next.
AUDUSD Technical
Analysis – 1 hour Timeframe
AUDUSD 1 hour
On the 1 hour chart, there’s
not much we can add here as the sellers will pile in around these levels, while
the buyers will look for a breakout to extend the rally into new highs. The red
lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the US
Retail Sales.
