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AUD/USD bulls on track for a run to the 200 day ma at 0.7271

  • AUD/USD is correcting the weekly bearish outlook, climbing from the Feb lows down in the 0.7050s but capped a figure higher.
  • AUD/USD is currently trading at 0.7140, from a high of 0.7160 and up from a low of 0.7132. 

With the US out for President’s day, the markets are quiet and offer a time to reflect and plan ahead. We have the Minutes of the RBA Policy meeting from the 5 February, although this is likely to be a non-event.

The switch-to neutral /dovish Governor speech the next day was enough for markets to take a view on the Aussie, especially accompanied by the February 8 Statement on Monetary Policy that slashed growth forecasts and delayed yet again the return to target for core inflation. 

“However, the actual policy statement released on Tuesday was rather upbeat (and misleading for the markets) suggesting that all was on track, just a small delay compared with expectations late last year,” analysts at TD Securities noted and we will perhaps see why from the minutes today. 

Key data ahead

We will see CFTC positioning and then wage growth and jobs data:

“We see wage growth chipping away at rate cut expectations. We look for 0.7%/q and 2.44%/y, and closer to 2¾%/y by year-end. For Jan employment our 20k and a steady 65.6% participation rate leaves the unemployment rate at 5.0%. An average of 20k/m leaves the u-rate steady at 5% by year-end, the RBA’s f/c. The Bank will be concerned if it creeps back towards 6% again,”  

the analysts at TDS explained. 

On the trade front, we will be keeping an ear out for progress between the US and Chinese officials this week meeting in Washington where a Chinese delegation led by Vice-Premier Liu He is expected to leave on Tuesday for the American capital after last week’s trade talks in Beijing produced ‘progress’, according to Chinese press. A tweet by US President Donald Trump on the ongoing trade war is a “positive” signal, brightening prospects of a deal from this week’s talks in Washington, according to an opinion piece published by China’s major state media outlets yesterday. 

AUD/USD levels

Analysts at Commerzbank explained that AUD/USD spent much of last week attempting to recover:

“It has based slightly ahead of our near term target at the 0.7022/15 October low and 50% retracement. Cloud support comes in at 0.7066. Rallies are eroding the 55 day ma at 0.7148 and this should be enough to reassert upside pressure to the 200 day ma at 0.7271 and the .7295 January high. Near term weakness is viewed as corrective only. Price action in January was exhaustive – the market charted a hammer (reversal). We have a TD perfected setup on the daily chart and a 13 count on the weekly chart. This suggests the down move ended at 0.6738.”