Fundamental
Overview
The US Dollar got a bit of
a boost this week as Fed Chair Powell reiterated that 50 bps of easing by year end
remains the base case. The market’s probability for the Fed to cut by 50 bps in
November fell from 51% to 40% as a result.
On the data side, the ISM Manufacturing PMI released yesterday missed
expectations slightly. On the bright side, the new orders index improved a
little which might be an early signal of better times ahead. By contrast, the
employment component fell further into contraction but remained above the cycle
low.
On the AUD side, the RBA kept the Cash Rate unchanged as expected at
the last meeting and although Governor Bullock maintained her hawkish stance,
the language was toned down a little. The market expects the first cut to come
in February 2025.
The recent monthly Australian CPI missed expectations and although it
didn’t change much the market’s pricing it was still an improvement. The AUD should
also be supported in the bigger picture as global growth picks up with the recent
Chinese easing measures.
AUDUSD
Technical Analysis – Daily Timeframe
AUDUSD Daily
On the daily chart, we can
see that AUDUSD is consolidating right above the key 0.6870 level. This is
where we can expect the buyers to pile in with a defined risk below the level
to position for a rally into new highs. The sellers, on the other hand, will
want to see the price falling back below the key level to position for a
pullback into the 0.68 handle.
AUDUSD Technical
Analysis – 4 hour Timeframe
AUDUSD 4 hour
On the 4 hour chart, we can
see that we have a strong support zone around the 0.68 handle where we can find
the confluence
of the trendline and the 38.2% Fibonacci
retracement level. If we get a pullback into the support, the buyers will
likely step in with a defined risk below the trendline to position for a rally
into new highs. The sellers, on the other hand, will want to see the price
breaking lower to increase the bearish bets into the 0.66 handle next.
AUDUSD Technical
Analysis – 1 hour Timeframe
AUDUSD 1 hour
On the 1 hour chart, we can
see that we have a minor downward trendline defining the current pullback. We
can expect the sellers to keep leaning on it to position for further downside,
while the buyers will look for a break higher to target new highs. The red
lines define the average daily range for today.
Upcoming
Catalysts
Today we get the US ADP report. Tomorrow, we get the latest US Jobless Claims
figures and the US ISM Services PMI. Finally, on Friday, we conclude the week
with the US NFP report.