- The Australian dollar is on the defensive due to mixed sentiment.
- Federal Reserve: US growth risks lean to the downside, limiting dollar gains.
- Next Week: Speeches by RBA and Fed officials will give direction to AUD/USD.
The Australian dollar (AUD) Losing ground against the US dollar (USD) amid mixed sentiment, with US stocks faltering as Federal Reserve (Fed) officials eased rising borrowing costs,. At the same time, China’s Covid-19 cases, which have passed the 30,000 threshold, are keeping investors on edge. In addition, following the Thanksgiving holiday in the United States (US), low liquidity conditions exaggerate market movements. Therefore, the AUD/USD is trading at 0.6743, losing 0.28% from its opening price.
Mixed sentiment keeps AUD on the back foot
European and US stocks fluctuate. The lack of a fundamental catalyst around the AUD/USD pair keeps traders digesting the Minutes from the last Federal Reserve meeting. Policy makers’ view that “slowing the pace of growth would probably be appropriate soon” triggered a rally in risk assets that lasted until Thanksgiving eve in the US. The US dollar is rising recovering against most G8 currencies, as shown by the Dollar Index (DXY), which gains 0.57% to 106,238.
Delving into the Minutes, Fed officials commented that the risks to growth in the United States are skewed to the downside. Thus, Thursday’s global S&P PMIs for October signaled that the US economy is slowing as indices entered contractionary territory, providing a tailwind for the Australian dollar. , as AUD/USD hit a weekly high of 0.6780.
However, the sentiment is fragile as Covid-19 cases in China broke the 30,000 threshold. According to Bloomberg, “selective lockdowns are taking place in almost every district,” and residents have been told not to leave Beijing unless necessary. That being said, traders have been on the safe side, with flows out of high beta currencies such as the Australian dollar to the safe haven of the dollar.
What must be considered
Highlights on next week’s Australian economic agenda include speeches by Reserve Bank of Australia (RBA) Governor Philip Lowe and Governor Kearns. In terms of data, building permits, manufacturing PMIs and retail sales will shed light on the Australian economy.
As for the United States, the Fed’s speech would dominate the headlines. On the economic gauge side, the Federal Reserve’s favorite inflation gauge, PCE, PMI and labor market data, would entertain AUD/USD traders.
AUD/USD Key Technical Levels
|Last price today||0.6738|
|Today I change daily||-0.0029|
|Today’s daily change in %||-0.43|
|today’s daily opening||0.6767|
|previous daily high||0.6778|
|previous daily low||0.6724|
|Previous Weekly High||0.6798|
|previous weekly low||0.6634|
|Previous Monthly High||0.6548|
|Previous monthly minimum||0.617|
|Daily Fibonacci of 38.2%||0.6757|
|Daily Fibonacci of 61.8%||0.6745|
|Daily Pivot Point S1||0.6734|
|Daily Pivot Point S2||0.6702|
|Daily Pivot Point S3||0.668|
|Daily Pivot Point R1||0.6789|
|Daily Pivot Point R2||0.6811|
|Daily Pivot Point R3||0.6843|
Source: Fx Street