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Fundamental
Overview
The USD got a short term
boost recently as Trump floated reciprocal tariffs. That came after a good US NFP report where the data was mixed at best but
still pointing to strength. The jump in average hourly earnings caught the eye
but that might have been distorted by the drop in average weekly hours.
We’ve also got another jump
in inflation expectations in the University of Michigan Consumer
Sentiment survey
showing that the tariffs news is the main culprit of the recent surge in
expectations.
The focus now switched to
the US CPI report due later today where Core inflation is expected to tick
lower which would be a welcome news. A lower than expected print should see the
US Dollar losing ground across the board once again, while a hot reading might
boost the greenback for the rest of the week.
On the AUD side, the Australian Q4 CPI report recently missed expectations
across the board with the underlying inflation figures easing further and now
comfortably in the RBA’s target range on a 6-month annualised basis.
As a reminder, the RBA softened
further its stance
at the last policy decision as it nears the first rate cut. The market is now seeing
an 84% chance of a 25 bps cut in February with a total of 75 bps of easing
expected by year end.
AUDUSD
Technical Analysis – Daily Timeframe
AUDUSD Daily
On the daily chart, we can
see that AUDUSD is rejecting the key resistance zone around the 0.63 handle. This
is where the sellers are stepping in with a defined risk above the resistance
to position for a drop back into the 0.6170 level. The buyers, on the other
hand, will want to see the price breaking higher to increase the bullish bets
into the 0.65 handle next.
AUDUSD Technical
Analysis – 4 hour Timeframe
AUDUSD 4 hour
On the 4 hour chart, we can
see that we have a minor support zone around the 0.6235 level. If the price
gets there, we can expect the buyers to step in with a defined risk below the
support to position for a break above the resistance. The sellers, on the other
hand, will look for a break lower to increase the bearish bets into the 0.6170
level next.
AUDUSD Technical
Analysis – 1 hour Timeframe
AUDUSD 1 hour
On the 1 hour chart, there’s
not much we can add here as the sellers will keep on pushing towards the 0.6235
support, while the buyers will look for a break above the resistance. From a
risk management perspective though, it would be much better to wait for the US
CPI report as any technical setup can be invalidated in a blink of an eye when
the data gets released. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US CPI report. Tomorrow,
we get the US PPI and the latest US Jobless Claims figures. On Friday, we
conclude the week with the US Retail Sales data.