Australian Dollar, AUD/USD, Fed, RBA Lowe, NZD – Talking Points

• Asia-Pacific markets may struggle today after US stocks fall on CPI
• RBA chief Philip Lowe opposes lofty rate hike expectations
• AUD/USD fails to clear the 61.8% Fib level after pinging the 50-day SMA

Friday’s Asia-Pacific Outlook:

the The Australian dollar pared its gains against the US dollar overnight after the pair hit its highest level since Jan. 2, pushing the exchange rate lower in Asia-Pacific trading. A scorching US inflation report bolstered higher rate bets, pushing the US dollar and Treasury yields higher and dragging the Dow Jones Industrial Average down 1.47%.

Risk aversion sentiment could spill over into APAC trading today, capable of dragging Asian equity indices lower, eroding gains established earlier in the week. The Aussie dollar came under more pressure this morning after RBA Governor Philip Lowe pushed back on hawkish market expectations. The RBA chief warned that raising rates too early would carry risks, including a blow to the labor market.

New Zealand released mixed economic data this morning. The Business NZ PMI for January fell from 53.8 to 52.1. Spending on electronic retail cards rose 3.0% in January on an am/m basis, compared to 0.3% m/m in December. These figures suggest domestic consumer demand is growing in the island nation, a likely result of the phasing out of Covid restrictions in recent months.

The Kiwi Dollar is virtually unchanged against the greenback after falling slightly in overnight trades. Later in the day, the NZD may move on first-quarter corporate inflation expectations, due at 02:00 GMT. China is expected to report vehicle sales (January) and Taiwan’s trade balance in January will also cross the wires. India will end the day with industrial production data (December) at 12:00 GMT.

AUD/USD Technical Forecast

AUD/USD jumped and tumbled overnight, failing to overcome the 61.8% Fibonacci retracement for the second day on an intraday move and just clipping the 50-day simple moving average (SMA). Fib’s pseudo 50% level may turn into support after prices struggled to clear above the level last week. Prices may consolidate to wrap up the week given today’s light economic conditions.

AUD/USD – Daily chart

Chart created with TradingView

— Written by Thomas Westwater, Analyst for DailyFX.com

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