Send 26/02/2024 Currency Trading update!
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In The News Today! 🌏
Market Conditions and what’s on the calendar 🗓️
Australian Wage Increases:
Wage increases in Australia for the final quarter of 2023 exceeded market expectations, with a quarter-on-quarter rise of 0.9% and an annual increase of 4.2%.
This development is expected to influence the Reserve Bank of Australia (RBA) to maintain a cautious approach regarding potential interest rate cuts.
RBA's Stance and Market Dynamics:
RBA's February meeting minutes indicated a possibility of raising interest rates if deemed necessary.
Analysts, including Catherine Birch from ANZ Bank, anticipate the cash rate to remain at 4.35% until November, potentially challenging market expectations of a rate cut around June.
AUD/USD held positive momentum, around 0.6565, in the early Asian session.
Upcoming Economic Events:
Focus shifts to the Australian monthly Consumer Price Index (CPI) and US Gross Domestic Product Annualised (Q4) as crucial upcoming events.
AUD/USD is currently trading near 0.6565, gaining 0.04% on the day, with investors awaiting fresh impetus from the Australian CPI release on Wednesday.
Fed's Concerns and USD Dynamics:
Several Federal Reserve (Fed) officials expressed concerns about the risks associated with cutting interest rates prematurely, emphasising the need for further evidence of inflation reaching the 2% target.
The US Dollar Index (DXY) hovers around the 104.00 mark, and the higher-for-longer rate narrative in the US may act as a headwind for the AUD/USD pair.
What happened last week …
RBA Meeting Minutes:
During the February meeting, the Reserve Bank of Australia (RBA) held its cash rate at 4.35%, as expected. The central bank hinted that a further rate hike cannot be ruled out.
Governor Bullock expressed optimism about recent inflation developments but mentioned a potential rate cut if consumption slows unexpectedly.
Despite these comments, the RBA maintained its hawkish bias during the meeting, leaving traders eager to analyse the meeting minutes for additional insights into the bank's policy considerations.
AUD Performance Analysis by Goldman Sachs:
Goldman Sachs analysts investigated the factors influencing the AUD's performance, noting a departure from its usual high beta status.
While the AUD traditionally rises with global equity markets, it has struggled despite the S&P 500 reaching record highs.
Factors contributing to this shift include mean reversion for global currencies from late 2023 trends and the increased correlation between Chinese equity performance and AUD returns since the beginning of the year.
Technical Analysis on AUD/USD Pair:
The AUD/USD pair traded near 0.6510, above immediate support at 0.6500.
A potential break below 0.6500 could lead to a move towards major support at 0.6450 and the weekly low at 0.6442.
On the upside, a breakthrough above the 14-day Exponential Moving Average (EMA) at 0.6525 could target the 23.6% Fibonacci retracement level at 0.6543 and the significant resistance level at 0.6550.
Global markets were focused on Nvdia earnings which were outstanding, driving most stock markets to historical highs
Things to look out for this week;
Wednesday 28th February
🇺🇸 Durable Goods Orders m/m - USD
🇺🇸 CB Consumer Confidence - USD
🇦🇺 CPI y/y - AUD
🇳🇿 Official Cash Rate - NZ
🇳🇿 RBNZ Monetary Policy Statement - NZ
🇳🇿 RBNZ Rate Statement - NZ
Thursday 29th February
🇺🇸 Prelim GDP q/q - USD
🇩🇪 German Prelim CPI m/m - EUR
Friday 1st March
🇨🇦 GDP m/m - CAD
🇺🇸 Core PCE Price Index m/m - USD
🇺🇸 Unemployment Claims - USD
🇨🇳 Manufacturing PMI - CNY
Saturday 2nd March
🇺🇸 ISM Manufacturing PMI - USD
🇺🇸 Revised UoM Consumer Sentiment - USD
