Reserve Bank of Australia (RBA)’s “dovish hike” sent AUD/USD to new intraweek lows earlier today.
Are we looking at the start of an intraweek downtrend?
Before moving on, ICYMI, yesterday’s watchlist looked at CHF/JPY for a countertrend trade opportunity after Switzerland released its CPI data. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Canada’s IVEY PMI slowed down from 8-month high of 60.1 to 51.6 as the pace of job creation eased in February.
Lower civilian aircraft bookings helped drag U.S. factory orders to a 1.6% dip in January after a downwardly revised 1.7% increase in December.
Japan’s real wages dropped by 4.1% y/y in January, marking the 10th consecutive monthly decline and the fastest decrease since May 2014.
BRC: Valentine’s Day spending helped boost UK retail spending by 4.9% y/y in February but the drop in volume of goods sold means shoppers are getting less for their money.
Australia’s retail sales rebound by 1.9% m/m in January after 4.0% decline in February as inflation and return of large-scale sporting and cultural events boosted catering services.
Australia posted a 11.69B AUD trade surplus in January, the smallest surplus since August, as exports (+1.4%) rose less than imports (4.6%)
RBA raised its rates by an expected 25bps to 3.6%, with the statement hinting of one more rate hike before turning data-dependent.
China’s trade surplus beat $81.8B expectations at $116.9B in the January-February period but a closer look showed exports (-6.8% y/y) and imports (-10.2% y/y) contracting deeper than market estimated.
Asian stocks slip on weak China trade data, focus shifts to Powell
In a two-hour presser, China’s new Foreign Minister Qin Gang talked of an “invisible hand” escalating the war in Ukraine and warned of “catastrophic consequences” if the U.S. does not “hit the brakes” on current relations strategies.
Switzerland’s jobless rate dipped from 2.2% to 2.1% in February.
Germany’s factory orders up by another 1.0% m/m in January, higher than the estimated 0.9% decrease, but annualized figures show 10.9% decline from January 2022.
Halifax: UK home prices unexpectedly jumped from 0.2% to 1.1% m/m in February thanks to reductions in mortgage rates and improved consumer confidence.
Price Action News
Expectations of an RBA rate hike sent the major AUD pairs to their U.S. session highs during the early Asian session.
The RBA did raise its rates by 25 basis points as expected, but the central bank also changed its tone from February’s “further increases in interest rates will be needed” to “further tightening of monetary policy will be needed.” Markets took the change in tone to mean that RBA may turn data-dependent after another rate hike in April.
AUD dropped across the board at the dovish hike and even saw renewed bearish pressure at the start of the European session as traders also priced in China’s disappointing trade numbers and uncertainty ahead of Powell’s testimony.
Upcoming Potential Catalysts on the Forex Economic Calendar:
Fed Chairman Powell to testify in DC at 3:00 pm GMT
SNB Chairman Jordan to talk monetary policy at 6:00 pm GMT
RBA Gov. Lowe to give a speech at 9:55 pm GMT
Japan’s bank lending at 11:50 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
Technical Chart of the Day: AUD/USD
RBA’s dovish rate hike and surprisingly weak exports and imports in China did NOT help AUD/USD’s prices today.
The pair not only broke below a descending channel, but it also dropped below the .6700 psychological level AND hit lows not seen since December.
Can AUD bears extend AUD/USD’s intraday losses?
AUD/USD has already hit the standard Pivot Point‘s S2 support and has fallen by 60 pips out of its average daily ATR of 80ish pips.
Powell’s testimony in DC could make or break AUD/USD’s intraweek downtrend.
Profit-taking and a bit of risk-taking might boost AUD/USD back to the .6710 – .6720 previous support zone. If risk aversion dominates today’s market themes, then AUD/USD could make new weekly lows and dip to the .6650 minor psychological level.
But if we see risk-taking or anti-USD sentiment in the next trading sessions, then today’s “breakout” may turn into a fakeout and boost AUD/USD back up to the .6720 – .6740 previous areas of interest.
