Jump to content

AUD/USD eyes rebound after iron ore catches bid on President Xi commentary



Australian dollar falls against US dollar as markets shift to risk-off; the 2022 BRICS Summit set to kick off today in virtual format and AUD/USD looks set for further weakness above key trendline support.

Source: Bloomberg

Friday’s Asia-Pacific outlook

Asia-Pacific markets are set to open higher after a rosy overnight session on Wall Street. The New York trading session saw risk assets climb, with all three major US equity indexes posting gains. The high-beta Nasdaq-100 Index (NDX) outperformed, closing 1.47% higher. Bitcoin prices rose more than 3%, in line with the positive market sentiment. Traders were unswayed by negative economic data, with S&P Global PMI data for the US in June missing estimates, although remaining in expansion territory.

Activity in the foreign exchange market, however, did not align with what equity markets were communicating. The US dollar, which typically strengthens amid risk-off moves, gained against its risk-sensitive peers, like the Australian dollar. Greenback strength appeared after Treasury sellers vanished mid-day, pushing yields modestly higher.

The Japanese yen may see some volatility today on the release of Japan’s inflation data for May. Analysts expect to see core inflation—a measure that removes volatile food and energy prices—cross the wires at 2.1%, according to a Bloomberg survey. The Japanese yen is near its weakest level against the dollar since 2002. A higher-than-expected inflation print may help underpin JPY strength, but the Bank of Japan has remained defiant against tightening policy despite the monumental collapse in its currency.

Elsewhere, industrial and precious metal prices fell. The growing threat of a global recession sent copper prices over 5% lower in New York. Chinese-sensitive iron ore prices managed to gain on comments from President Xi. The Chinese leader reaffirmed his commitment to support economic growth at the 2022 BRICS summit. The Australian dollar remains weak despite the rebound in iron ore, but traders may take notice today and put a bid on the Australian currency.

Notable events for June 24:

  • Singapore – Industrial Production (May)
  • Taiwan – M2 Money Supply (May)
  • China – Current Account Final (Q1)
  • Australia – RBA Governor Lowe Speech

AUD/USD technical forecast

AUD/USD found support from a trendline formed from the October 2021 swing high. That trendline may continue to underpin prices, but a break lower would likely lead to a test of the May swing low. The psychologically important 0.7000 level remains a visible target for bulls, should prices rebound. Meanwhile, the MACD and RSI oscillators remain negative.

AUD/USD daily chart

Source: TradingView

Thomas Westwater | Analyst, DailyFX, New York City
24 June 2022

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.


Recommended Comments

There are no comments to display.

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Create New...