Jump to content

AUD/USD: dazzles in performance, despite risk aversion flows


Recommended Posts

AUD/USD outperforms; after a run of hawkish RBA communique and news from China that NPC approved a mid-year expansion to its central budget for the first time since the Asian Financial crisis in 1998.

 

original-size.webpSource: Bloomberg

 

 Tony Sycamore | Market Analyst, Australia | Publication date: Tuesday 31 October 2023 07:58

A notable end to last week for the AUD/USD as it outperformed, despite a wave of risk aversion flows, which hit asset market ahead of the weekend on concerns around higher bond yields and the conflict in the Middle East.

The AUD/USD’s outperformance last week follows a run of hawkish RBA communique that was initially observed in their meeting minutes released in Mid-October - and a sequence of stronger-than-expected economic data in recent weeks that has included:

  • In September the unemployment rate, which fell to 3.6% vs 3.7% expected
  • Q3 Inflation (trimmed mean) increased to 5.2%YoY vs 5.0% expected
  • Q3 PPI rose by 1.8% vs 0.4% previous
  • Q2 GDP printed at 2.1% YoY vs 1.6% expected
  • Retail sales for September increased by 0.9% vs 0.3% expected.

RBA might increase rates due to an increase of Q3 inflation data

The stronger data has raised expectations the RBA will raise rates by 25bp to 4.35% when it meets next week. An RBA rate hike would contrast with the Fed, which is expected to keep rates on hold on Thursday's FOMC meeting, and provide softer forward guidance, which will likely see it keep rates on hold into year-end.

The divergence in central bank expectations between the Fed and the RBA, which has provided support for the AUD/USD is being reinforced by news out of China last week. Which said that the NPC approved a mid-year expansion to its central budget for the first time since the Asian Financial crisis in 1998.

AUD/USD technical analysis

The weekly candle that formed last week displays a loss of momentum type that suggests the AUD/USD is trying to base at last week's .6270 low.

AUD/USD weekly chart

 

AUDUSD_2023-10-31_13-50-33.pngSource: TradingView

However, as viewed on the daily chart below, there is a good layer of short-term resistance at .6400c coming from recent highs and more significant resistance at .6520/30 from highs in August and September. The AUD/USD needs to break above both these layers of resistance to confirm a trend reversal is underway.

AUD/USD daily chart

 

original-size.webpSource: TradingView

 

 

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. 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.

Link to comment

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
  • image.png

  • Posts

    • MON Protocol aims to be a leading developer and publisher of blockchain-native IPs and games. Their vision extends beyond traditional gaming ecosystems, as they seek to bring games and gaming characters onto the blockchain. MON is an ERC-20 fungible token that powers and governs fractionalized IP ecosystems.   30% of the total supply is allocated for community claims, emphasizing community-driven initiatives. While 29% of the total token supply is dedicated to fostering growth and sustainability within both the Pixelmon and MON Protocol communities. All one billion tokens will be fully unlocked within 48 months of the token generation event (TGE), which is anticipated to take place in Q1 2024. This gradual release underscores MON Protocol's commitment to transparency and ecosystem development. Will MON Protocol's unique approach to IP governance, combined with Bitget's strategic listing, positions it as a frontrunner in fostering community engagement and sustainable ecosystem growth?
    • Another reason I prefer DAX to other markets is that I am able to use my own profitable method on it, which I call "Reverse Trades." In it's simplest form it is a good Entry Point, which is used repeatedly for trades, for as many times as the market price returns to this Entry Point.  This is illustrated in the chart below for 22nd May. The best Reverse Trades occur when the market beats the Entry Price and then re-crosses the Entry Price. If this is not clear, feel free to write to me and I will explain in greater detail.
    • The gaming industry is one of the industries that has effectively leveraged the efficiency of blockchain technology to drive growth. A fiercely competitive sector, it takes unique innovative Ideas to stand out. When analysing the chances of infant GameFi projects to reach the heights, one project seems to have staked a claim to be soon held in the same breath as the leading projects– Param Labs. Param Labs, an AAA game and blockchain development studio is dedicated to creating top-tier blockchain-integrated games with player-owned digital assets, and is developing a modular gaming ecosystem, comprised of games and infrastructure.  Already a trending project thanks to the widespread participation of its airdrop, Param has gone on to strike partnership with Animoca Brands, a frontrunner for advancing digital property rights within gaming and the open metaverse; highlighting its wildfire-esque spread. While the buzzing community anticipate their airdrop reward, the news that it will launch on Bitget on 29th May amongst other exciting listings has spiked the anticipation. If you can relate, how excited are you with the imminent launch and what Param Labs brings to the gaming industry generally?
×
×
  • Create New...
us