Australian Dollar, AUD/USD, US Dollar, Treasuries, PMIs, RBA – Talking Points
- Asia-Pacific markets set for mixed open after Dow Jones hits record
- Australian Dollar in focus ahead of the latest RBA chart pack release
- AUD/USD up overnight, but key SMAs appear to be capping upside
Wednesday’s Asia-Pacific Forecast
Asia-Pacific markets look set for a mixed open after Wall Street traders shifted out of high-beta technology stocks and into the cyclically-sensitive energy and finance sectors. Equity markets across Asia have gotten off to a mostly slow start this week, although Japan’s Nikkei 225 index has outperformed, which is likely due to a broadly weaker Yen. Risk-sensitive currencies like the Australian Dollar fared much better overnight.
Meanwhile, the US Dollar was largely unchanged via the DXY index overnight despite a surge in Treasury yields. The 5-year note’s rate hit the highest level since February 2020. However, the 1- and 2- year rates fell. The Greenback is more sensitive to those shorter-term yields, which explains some relative weakness. Yields rise when bond prices fall.
Elsewhere, oil prices gained after OPEC and its allies, known as OPEC+, announced they will increase production as a group by 400,000 additional barrels a day in February. The cartel cited robust demand prospects despite the recent surge in Covid-19 cases across the world. While the new Omicron variant has caused some travel restrictions, health policy experts believe the strain is less deadly than those before it, leading to the belief that it could perhaps bring an accelerated end to the pandemic.
Today, the Reserve Bank of Australia (RBA) will release its chart pack summarizing some of the central bank’s financial and macroeconomic data. ANZ bank will also release job advertisements data for December. The Philippines and Thailand will report December inflation numbers, and India’s December PMI reading from Markit Economics will cross the wires. Singapore and Hong Kong will also see updated PMI figures today.
Speaking of PMI data, China’s Caixin released its PMI reading for December manufacturing at 50.9, up from the prior 49.9 figure. That beat analysts’ expectations of 50.0, according to a Bloomberg survey. The data confirms the NSB manufacturing PMI numbers from last week, although the Caixin figure better reflects smaller firms compared to larger firms in the NBS data.
AUD/USD Technical Forecast
While AUD/USD made strong overnight gains, the daily candlestick is struggling to eclipse the prior day’s open, as well as the falling 50-day Simple Moving Average (SMA). A break above those levels would almost immediately put prices up against the 100-day SMA. Alternatively, a break low would have prices move toward the December low at 0.6993.
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