Fundamental
Overview
Yesterday, the USD
weakened across the board following the US
PPI release where the data came in line with expectations. The reaction
showed that the market is eager to buy risk and that even little signs of better
inflation figures can trigger positive risk sentiment.
This will be
important to remember in light of today’s US CPI report where in line or soft
figures will likely lead to more USD selling and strong risk-on sentiment.
Conversely, hot readings might have the opposite effect with the USD bid across
the board.
AUDUSD
Technical Analysis – Daily Timeframe
AUDUSD Technical Analysis
On the daily
chart, we can see that AUDUSD tonight hit the wall around the 0.6650 level.
This resistance
held for months and a break above it supported by benign US CPI figures should
open the door for a rally back into the 0.6870 level.
On the other hand,
hot CPI readings should see the pair getting smacked back down to the first
support around the 0.6557 level.
AUDUSD
Technical Analysis – 1 hour Timeframe
AUDUSD 1 hour
On the 1 hour
chart, we can see that the price yesterday bounced on the trendline
following the US PPI release and rallied back into the key resistance. A lot
will depend on the US CPI report, but we can say that the risk/reward at this
level for the sellers might be tempting to position short into the release.
For more
conservative sellers, waiting for a break below the trendline and especially
below the 0.6557 support might be a better idea to position for a drop into the
0.6464 level next.
The buyers, on the
other hand, don’t have a good risk/reward setup entering around these levels
before the release. For them it would be better to wait for the actual release where
in line or soft figures should trigger a breakout and give the opportunity to go
long into the 0.6870 level.
Upcoming
Catalysts
Today all eyes will be on the US CPI report although we
will also get the US Retail Sales data at the same time. Tomorrow, we have the
Australian Labour Market report and later in the day the latest US Jobless
Claims figures where it will be interesting to see whether the last week’s
numbers were the start of a trend or just a fluke.