Australian Dollar, AUD/USD, China, Covid, Commodities, Technical Outlook – Talking Points

  • Asia-Pacific markets look to gauge market sentiment forward of an event-heavy week
  • Covid lockdowns throughout China start to ease, seemingly offering a lift to metals
  • AUD/USD could rebound this week, however outlook stays bearish on a technical foundation

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Monday’s Asia-Pacific Outlooks

Asia-Pacific markets could open blended as merchants take a cautious stance after final week’s risk-off bout that despatched world fairness markets decrease and the safe-haven US Dollar increased. The US central financial institution’s fee resolution on Wednesday will drive market sentiment. Traders are ready to see if the Federal Reserve delivers a 75-basis level fee hike or a 100-bps hike. An up to date Summary of Economic Projections (SEP) can be due.

Although the financial docket for in the present day’s APAC session is gentle, in the present day’s path is prone to set the tone going into Wednesday’s FOMC. The Bank of England and Bank of Japan are additionally as a result of replace their coverage charges, which can inject extra volatility into the international change markets. The BoE is anticipated to hike its benchmark fee to 2.25% from 1.75%, whereas the BoJ is seen protecting its coverage setting largely unchanged regardless of extraordinary Yen weak point.

Bitcoin and different main cryptocurrencies traded decrease in a single day, suggesting final week’s danger aversion stays current. A stronger US Dollar battered most commodities final week, together with copper and iron ore. However, the introduced reopening of China’s Chengdu, a megacity in Sichuan province, could raise industrial metals this week. The native authorities launched an announcement outlining reopening steps for public venues and different institutions.

The China-sensitive Australian Dollar could profit from the rolling again of restrictions in China, and whereas China’s Covid menace stays, policymakers could also be hesitant to announce main lockdowns as the nation’s National Congress approaches. Hong Kong is ready to launch unemployment information for August at 08:30 GMT. Monday’s EU session could also be gentle in quantity as markets within the United Kingdom shut for the Queen’s funeral.

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AUD/USD Technical Outlook

AUD/USD fell practically 2% final week, with costs briefly sinking to 0.6670, a contemporary 2022 low. Prices have been trending decrease inside an outlined channel vary since mid-August. A reduction rally could take the foreign money pair as much as channel help, however the outlook stays bearish throughout the channel and under the 50-day Simple Moving Average (SMA).

AUD/USD Daily Chart

Chart, histogram  Description automatically generated

Chart created with TradingView

— Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the feedback part under or @FxWestwater on Twitter

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