Australian Dollar, AUD/USD, US Dollar, Natural Gas, Oil, Technical Outlook – TALKING POINTS
- APAC markets are set to trade against a stronger US Dollar to close out the week
- China heatwave prompts additional factory closures, weighing on APAC sentiment
- AUD/USD may threaten its August low if prices break the 38.2% Fibonacci level
A stronger US Dollar may weigh on Asia-Pacific markets today. The USD DXY Index rose around 0.75% overnight despite softer Treasury yields. St. Louis Fed President James Bullard backed a 75 basis-point move for the next FOMC meeting. Kansas City Fed President Esther George sounded relatively dovish, taking a cautious stance while supporting further tightening. The benchmark S&P 500 closed 0.23% higher. Gold prices fell against the Greenback.
EUR/USD and GBP/USD sank as European natural gas prices surged, settling at a record high after rising nearly 7%. US natural gas was volatile, but prices ended slightly lower. WTI crude and Brent crude increased over 3% on upbeat US jobless claims data. Earlier this week, the Energy Information Administration reported a large draw in US oil stocks.
China’s Sichuan province remains under a “red alert” warning amid record-high temperatures. Chongqing city officials ordered factories to close until next Wednesday to help ease power grid strain. The heatwave threatens to strain an economy already weighed down by sporadic Covid lockdowns. The People’s Bank of China (PBOC) is expected to cut interest rates next week in a bid to support credit growth. The 1- and 5-year loan prime rates are expected to drop to 3.6% and 4.35%, respectively.
New Zealand’s balance of trade for July rose to NZ$-1092 million from a revised NZ$-1102 million. NZD/USD extended its post-RBNZ weakness. AUD/USD was also lower from yesterday as traders digested the unexpectedly weak jobs report. China’s ailing economy is weighing on the APAC currencies. New Zealand’s credit card spending data for July is set to cross the wires today along with Indonesia’s second-quarter current account. Japan’s core inflation gauge for July is expected to increase to 2.4% y/y from 2.2% y/y.
AUD/USD Technical Outlook
AUD/USD is trading at its 38.2% Fibonacci retracement level just below the 50-day Simple Moving Average. A break below that Fib would threaten the August low at 0.6869. A falling MACD oscillator suggests continued weakness ahead. However, a break back above the 50-day SMA may help to revive some buying but the path of least resistance appears biased to the downside.
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
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