- US economic data was mixed and supported the dollar.
- US Retail Sales were the fastest growing in eight months, while Industrial Production disappointed expectations.
- Even though Australia’s MPI rose, it won’t stop the Reserve Bank of Australia from rising 25 basis points.
The AUDUSD back from weekly highs around 0.6800 after US sales report showing consumer resilience despite rising interest rates. In addition, a risk aversion drive spurred by geopolitical jitters capped Australian dollar (AUD) gains. At the time of writing, the AUDUSD is trading at 0.6741, below its opening price, after reaching a daily high of 0.6792.
US retail sales soared, triggering a risk aversion boost
US stocks remain negative, following the US Retail Sales report. The US Commerce Department reported that October Retail Sales grew 1.3% MoM versus 1 % expected by analysts. In the same report, the control group’s sales used to calculate Gross Domestic Product (GDP) rose 0.7% MoM versus a 0.3% rise.
With the last two inflation reports in the United States, the Consumer Price Index (CPI) and the Producer Price Index (PPI), being softer, consumers put additional pressure on the Federal Reserve (Fed). . However, a number of Federal Reserve officials who made remarks commented that the central bank is determined to tackle inflation, but with gradual interest rate hikes.
Later, two Fed officials crossed wires. New York Fed President John Williams said price stability is essential for the smooth functioning of the US economy. Later, San Francisco Fed President Mary Daly said the central bank wants the economy to slow down, so it can bring inflation down. She added that “pausing is not part of the discussion” and expects the federal funds rate (FFR) to top out at around 4.75%-5.25%.
Other US data showed during the day was Industrial Production (IP), which fell from 0.1% in September to -0.1% MoM, below estimates for a 0.2% increase.
It is believed that the jump in Australia’s WPI will not deter the RBA from making gradual increases
Meanwhile, Australia’s Wage Price Index (CPI) rose 3.1% in the third quarter, more than expected but in line with what the Reserve Bank of Australia (RBA) considered a necessary condition for reaching its 2-3% CPI inflation target, according to ING analysts.
ING analysts said: “Consequently, even with the latest inflation data and now wages surprising to the upside, we don’t think they will return to their previous 50 basis point pace of tightening and will continue at a 25 basis point pace in upcoming meetings, with the peak of cash rates likely to occur in 1Q23 when the cash rate hits 3.6%.”
AUDUSD pulled back from weekly highs and pared its previous gains, although the inverted head and shoulders pattern remained in play. As long as AUDUSD remains above 0.6700, a move towards the inverted head and shoulders pattern target is anticipated at 0.6870.
AUDUSD Price Analysis: Technical Perspective
From a daily chart standpoint, the AUDUSD continues to have a neutral or bullish bias. The inverted head and shoulders pattern remains intact unless the pair breaks below 0.6400. Of note, the 100 day EMA around 0.6696 acted as support twice, meaning buyers stepped in at that level. The Relative Strength Index (RSI) in bullish territory reaffirms that buyers are in command, although its downward slope suggests that the AUDUSD could consolidate in the 0.6700/0.6800 area.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
