Australian Dollar, AUD/USD, US Dollar, RBA, Market Sentiment – Talking Points
- Asia-Pacific markets set for a risk-on session after Wall Street stocks rise
- RBA policy statement set to cross the wires, putting Aussie Dollar in focus
- AUD/USD momentum eases, prices form Doji candlestick near 50% Fib
Friday’s Asia-Pacific Outlook
Asia-Pacific equity markets may close out the week on a bright note after an impressive slate of earnings reports from Wall Street companies including Amazon, Snap, and Pinterest boosted an already risk-on move. Despite improving market sentiment, the risk-sensitive Australian Dollar struggled versus the US Dollar through the overnight session even against the backdrop of broader weakness in the Greenback.
That US Dollar weakness is reflecting poor expectations for the upcoming non-farm payrolls report. Analysts see 134k jobs added in January, according to the Bloomberg consensus forecast. That would be the weakest jobs number since December 2020, when the US lost 306k jobs. That said, a better-than-expected print may revive the US Dollar, as it would likely bolster Fed rate hike bets.
Stock and bond markets will remain closed in China, including Hong Kong, for the Lunar New Year holiday. Those markets are set to reopen on Monday. The Japanese Yen fell versus most of its peer currencies overnight, which may help Japan’s Nikkei 225 index stage a comeback from Thursday’s losses. WTI and Brent crude oil prices rose overnight, with the US benchmark rising above the $90 per barrel mark for the first time since 2014.
Traders will parse through the Reserve Bank of Australia’s policy statement today, looking for insight into policymakers’ thinking processes. The market is pricing in nearly 100 basis points to the RBA’s benchmark rate by the December meeting, contrasting with RBA Governor Lowe’s dovish outlook. The RBA chief did say earlier this week at an economic forum that a 10 bps hike this year isn’t off the table, in his first apparent capitulation to rate hawks.
AUD/USD Technical Forecast
AUD/USD is grappling with the 50% Fibonacci retracement level after an indecisive price action overnight, represented by a Doji candlestick. Upward momentum from lows set in late January, when a bullish RSI divergence formed, appears to be easing. That said, prices may reverse lower in the short term if bulls can’t rally higher.
AUD/USD Daily Chart
Chart created with TradingView
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwater on Twitter