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AUD/USD looks ready to extend its short-term downtrend ahead of the U.S. core PCE price index release!
How will the pair react to potential catalysts in the next trading sessions?
Before moving on, ICYMI, yesterday’s watchlist checked out USD/JPY’s range resistance ahead of the U.S. preliminary GDP release. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. GDP Preliminary Est for Q4 2023: 3.2% q/q (3.3% q/q forecast; 4.95 q/q previous); Price Index rose by 1.7% q/q (1.5% q/q forecast; 3.3% q/q previous)
U.S. goods trade deficit widened from $87.9B to $90.2B in January as imports (1.1%) rose faster than exports (0.2%)
FOMC members Collins, Bostic, and Williams made speeches supporting the Fed’s “wait for further inflation deceleration” biases
Canada’s current account deficit narrowed from 4.7B CAD to 1.6B CAD in Q4 2023 (vs. 1.9B CAD deficit expected)
EIA crude oil inventory report for week ending Feb. 23: +4.2M bb to 447.2M bbl vs. +3.51M bbl the previous week
Japan’s preliminary industrial production dropped by 7.5% m/m in January (vs. -6.7% expected, 1.4% previous); Annual rates dipped by 1.5% after a 0.7% decrease in December
Japan’s retail sales maintained its 2.3% y/y growth in January (vs. 2.0% expected)
ANZ: NZ business confidence eased from 36.6 to 34.7 in February; Inflation expectations dropped from 4.3% y/y to 4.0% y/y
Australia’s retail sales improved from -2.1% m/m to 1.1% m/m in January (vs. 1.6% expected)
Australia’s private capital expenditure accelerated from 0.3% q/q to 0.8% q/q (vs. 0.4% expected) in Q4 2023
Price Action News
Overlay of JPY vs. Major Currencies Chart by TradingView
The yen was king of pips against its major counterparts thanks to Japanese officials supporting a stronger yen as well as the BOJ possibly ending its negative interest rate policies (NIRP)
BOJ Board Member Hajime Takata mentioned that they need to consider the end of NIRP, the end of the yield curve control framework, and their policies possibly overshooting their targets. Meanwhile, Japan’s top currency diplomat Masato Kanda reminded that they’re watching the yen’s moves “with a strong sense of urgency” and they’re “ready to respond appropriately” if they see “excessively volatile” moves.
JPY is about 0.40% to 0.70% higher than its counterparts, with the most gains seen against NZD, CAD, and, USD and the least gains made against AUD, CHF, and EUR.
Upcoming Potential Catalysts on the Economic Calendar:
Germany’s unemployment change at 8:55 am GMT
U.K.’s mortgage approvals and net individual lending at 9:30 am GMT
Canada’s GDP at 1:30 pm GMT
U.S. core PCE price index at 1:30 pm GMT
U.S. initial jobless claims at 1:30 pm GMT
U.S. personal income and spending at 1:30 pm GMT
U.S. Chicago PMI at 2:45 pm GMT
U.S. pending home sales at 3:00 pm GMT
FOMC members Bostic and Mester scheduled for speeches later today
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! ️
AUD//USD 15-min Forex Chart by TradingView
In case you missed it, Australia’s January retail sales data grew weaker than market estimates. Some traders also took out their “risky” bets in favor of staying in the sidelines ahead of the U.S. core PCE report. Luckily for AUD bulls, speculations of further Chinese stimulus lowkey supported overall risk sentiment.
AUD/USD, which hit a bottom just under .6500, traded higher but also encountered resistance at the .6525 zone.
And why not? The resistance area lines up with the 15-minute chart’s 200 SMA. What’s more, it’s also where the R1 (.6530) Pivot Point line and trend line resistance are hanging out.
Let’s see if today’s data releases will help drag AUD/USD lower.
The closely watched U.S. core PCE price index – the Fed’s preferred inflation measure – is expected to print sticky high prices, which would help Fed members get comfortable with their “higher for longer” stance.
Sticky high inflation may push USD higher against AUD and drag AUD/USD lower. A move to the .6490 previous lows may be on the table if we do see a USD-friendly trading environment.
AUD bears can also consider new weekly lows for AUD/USD if today’s catalysts provide new reasons for USD bulls or AUD bears to extend the pair’s downtrend.
What do you think? How low can AUD/USD go after today’s data releases?
