Australian Dollar, AUD/USD, US Dollar, Iron Ore, China, Japanese PPI, USD/JPY – Talking Points
- of Australian dollar found support U.S. dollar slide down
- Markets focus on China reopening, but there may be hurdles
- if the product price keep going north AUD/USD advantage?
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The Australian dollar rose earlier in the week as optimism increased over prospects for China to boost global economic growth and the country seeks to reopen its economy.
Iron ore, Australia’s biggest export, softened slightly on Monday but remains well above last October’s lows. Base metals in general are soaring in anticipation of increased demand from the Middle Kingdom.
China’s reopening has been welcomed by the market, but somewhat uncertain Covid-19 data has clouded the outlook. This effect may make some investors cautious.
China’s GDP data tomorrow will be watched closely for clues about the state of the world’s second largest economy.
Japan’s year-over-year PPI to the end of December was 10.5%, beating previous forecasts of 9.5% and 9.7%. Dec was 0.5% m/m, beating expectations of 0.3% and prior 0.8%.
The data revealed an upward revision. USD/JPY continues its weakness near seven-month lows below 127.50. Further tightening is likely at Wednesday’s Bank of Japan (BoJ) monetary policy meeting.
Asia-Pacific equities largely reflect positive sentiment with all major indices except Japan being green, and potential moves ahead by the BoJ weigh heavily on that.
Crude oil is somewhat bearish today, but is largely holding onto last week’s gains. The WTI futures contract has him over 79.50 barrels and the Brent contract is near 85 barrels at press time. Gold today joined the base metal’s higher trading with his nine-month high of US$1,927.
The United States celebrates Martin Luther King Jr. Day today.
You can view the full economic calendar here.
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AUD/USD Technical Analysis
AUD/USD remains inside the uptrend channel, teetering at the upper band of the 21-day Simple Moving Average (SMA)-based Bollinger Bands.
Resistance is likely at the previous highs and breakpoints of 0.7047, 0.7069 and 0.7137. On the downside, support is likely at previous lows and breakpoints of 0.6956, 0.6916 and 0.6860.
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— Written by DailyFX.com Strategist Daniel McCarthy
please contact daniel @DanMcCathyFX on Twitter