Jump to content

AUD/USD rises on RBA hawkish stance and China’s credit surge


Recommended Posts

The AUD/USD ends its losing streak buoyed by a hawkish RBA and record credit growth in China, setting the stage for Australia's pivotal job report.

 

original-size.webpSource: Bloomberg

 

Written by: Tony Sycamore | Market Analyst, Australia
 
Publication date: 

Last week saw the AUD/USD snap a five-week losing streak, following a more hawkish than expected RBA meeting, and as China credit data beat expectations.

Despite the RBA keeping the cash rate unchanged at 4.35%, and revising down its forecasts for core inflation (3.1% by end-24, from 3.3% previously), the RBA retained its tightening bias, noting that “a further increase in interest rates cannot be ruled out”.

Data released on Friday in China showed that Chinese banks extended CNY 4.92 trillion in new yuan loans in January, a record high since records began in 2004. At the same time, Total Social Financing (TSF), a broader measure of credit and liquidity, reached a record high of CNY 6.5 trillion in January, well above forecasts for CNY 5.55 trillion. The stronger-than-expected credit data will provide much-needed support from the embattled Chinese economy.

This week's critical local economic event for the AUD/USD is Thursday's labour force report for January.

What is expected from this week's Labour Force Report (Thursday, February 15th at 11.30pm)

Last month, the Australian economy lost a sizeable 65.1k jobs in December vs. the 15k gain expected. The unemployment rate remained unchanged at 3.9% due to a significant drop in the participation rate from 67.1% to 66.8%.

David Taylor, ABS head of labour statistics, said: "The fall in employment in December followed larger than usual employment growth in October and November, a combined increase of 117,000 people, with the employment-to-population ratio and participation rate both at record highs in November."

This month, the market is looking for the economy to add 37.5k jobs and for the participation rate to increase to 66.9%. This would see the unemployment rate rise to 4.0%, the highest since February 2022 and keep intact our view for two 25bp rate cuts in 2024, the first in August.

AU unemployment rate chart

 

original-size.webpSource: TradingEconomics

AUD/USD technical analysis

Recently, we have been looking for the AUD/USD to stabilise and move higher based on the idea that the pullback from the December .6871 high is part of a correction, rather than a reversal lower. However, last week's break below .6500c has created a degree of technical damage and cast doubt over this interpretation, leaving us with a more neutral bias.

To restore a more positive outlook, the AUD/USD must see a sustained move above last week's .6540 high and then above the 200-day moving average at .6570. Aware that while below the .6540/70 resistance zone, the risks are for a test of support at .6400/.6380.

AUD/USD daily chart

 

original-size.webpSource: TradingView

  • Source:TradingView. The figures stated are as of 12 February 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

 

 

This information has been prepared by IG, a trading name of IG Markets Limited. 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. See full non-independent research disclaimer and quarterly summary.

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

    • Avail, founded by former Polygon co-founders Anurag Arjun and Mihailo Bjelic, is a groundbreaking modular blockchain project that aims to overcome the limitations of traditional blockchain networks. Launched in late 2020, Avail offers a versatile platform for trust-minimized applications and sovereign roll-ups, providing a secure and scalable data availability layer with customizable consensus. At the heart of Avail's innovation is its Unification Layer, which comprises Avail DA, Nexus, and Fusion. This tripartite approach addresses key challenges in blockchain scalability, interoperability, and security, positioning Avail as a key player in the evolving modular blockchain landscape. Avail's Data Availability (DA) solution stands out with its low-cost, expandable blobspace, enabling numerous rollups and supporting the development of application-specific and general-purpose decentralized applications (dApps). By offering opt-in data availability services for rollup networks, Avail provides a more cost-effective alternative to Ethereum for data storage, making it an attractive choice for developers and projects. The AVAIL token serves as the backbone of Avail's ecosystem, offering users the ability to stake and earn rewards, as well as participate in the project's governance. As Avail continues to evolve, the AVAIL token will play a crucial role in shaping the future of this modular blockchain. For Crypto enthusiast exploring the potential of the AVAIL token and Avail's innovative solutions can be a rewarding opportunity. Bitget's pre-market trading feature allows users to get early access to emerging projects like Avail, giving them the chance to be at the forefront of the modular blockchain revolution. By taking advantage of the exchange pre-market trading, users can stay ahead of the curve and potentially benefit from the growth of Avail and the AVAIL token.
    • Eager to dive into cryptocurrency trading? NakitCoins presents its advanced multi-crypto ATM, streamlining the process of buying and selling bitcoins with unparalleled efficiency. Focused on both security and precision, our platform provides a low-risk transaction environment through our robust monitoring systems.
    • Hi AshishIG, thanks for the quick response. Indeed, I don't see the CTC for 2024, I only see the 'Cost and Charges' document for download.
×
×
  • Create New...
us