Saturday, February 24, 2024
HomeUncategorizedAUD/USD stays bearish near 0.6600 amid China, First Republic inflicted fears ahead...

AUD/USD stays bearish near 0.6600 amid China, First Republic inflicted fears ahead of RBA, Fed

  • AUD/USD fades bounce off seven-week low amid sour sentiment, anxiety before key data/events.
  • US FDIC calls for bids to turn First Republic bank, China PMIs disappoint.
  • Recent data suggests divergence between the RBA and the Fed monetary policy.
  • US NFP, second-tier Aussie data and risk catalysts are also important to entertain Aussie pair traders.

AUD/USD justifies its risk barometer status as the pair sellers attack the 0.6600 round figure, fading the late Friday’s corrective bounce after refreshing the seven-week low, during early Monday in Asia. In doing so, the Aussie pair bears the burden of the risks emanating from downbeat China activity data for April and the auction of another US bank, namely the First Republic Bank. Also exerting downside pressure on the Aussie pair is the cautious mood ahead of this week’s monetary policy meeting of the Reserve Bank of Australia (RBA) and the US Federal Reserve (Fed).

Having witnessed a slump in the First Republic shares and fleeing deposits from the US bank, the Federal Deposit Insurance Corporation (FDIC) finally took a tough decision to call in bids for the troubled bank. The same attracted multiple top-tier private organizations, including JP Morgan, to bid for the bank’s takeover. The results are up for release and can give only knee-jerk optimism as an immediate defense of the bank by a private player isn’t a solution to the broad banking problems. On the contrary, the same raises fears of such actions for the larger public banks in the future.

During the weekend, China’s official NBS Manufacturing PMI disappointed markets with 49.2 figures for April, versus 51.4 market forecasts and 51.9 prior readings. It’s worth noting that the Non-Manufacturing PMI rose past 50.4 expected figures to 56.4 but remained below 58.4 reported in March. With the downbeat numbers from Australia’s biggest customer, as well as the banking fears, the AUD/USD pair remains pressured of late.

In the last week, headline inflation numbers from Australia have disappointed the Aussie pair buyers, on both the monthly and the quarterly format. The same joins the RBA’s latest pause in the rate hike trajectory to raise the odds of witnessing one more status quote decision by the Australian central bank.

On the other hand, the first readings of the US Gross Domestic Product (GDP) for the first quarter (Q1) of 2023, also known as Advance readings, marked mixed outcomes. That said, the headline US GDP Annualized eased to 1.1% from 2.0% expected and 2.6% prior but the GDP Price Index inched higher to 4.0% on an annualized basis from 3.9% prior and 3.8% market consensus. Further, the Fed’s preferred inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index, for March matched 0.3% market forecasts and prior to MoM but rose to 4.6% from 4.5% expected on YoY, with an upwardly revised previous reading of 4.7%. On the same line, the US Employment Cost Index also increased by 1.2% in Q1 2023, versus the 1% increase marked previously.

Amid these plays, S&P 500 Futures print mild losses even as Wall Street closed positive and the yields eased.

Moving on, AUD/USD pair may remain pressured amid the market’s cautious mood ahead of the top-tier data/events, as well as due to the sour sentiment. However, major attention will be given to the RBA and Fed moves as a monetary policy divergence appears to brew.

Technical analysis

Unless rising back beyond the previous support line stretched from early March, close to 0.6665 by the press time, the AUD/USD pair is well-set to refresh the yearly high of around 0.6565.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Read More

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Recent Comments