AUD, AUD/USD, USD, CURRENT ACCOUNTS, GDP – TALKING POINTS
- of Australian dollar Postponed this week’s bearish move
- Retail sales and current account surplus beat expectations
- The trend is broken for now.what does it say about AUD/USD?
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The Australian dollar consolidated earlier this week after declining over 2% last week. The move was sparked by the U.S. dollar rising on perceptions of the more hawkish Federal Reserve.
Domestic data released today reveal the potential strength of the economy from the end of last year through 2023.
The fourth quarter current account surplus was AUD 1.41 billion against a forecast of AUD 5.5, revised to AUD 0.8 billion from AUD -2.3 billion in the previous press release.
Monthly retail sales in January were up 1.9%, as opposed to the expected 1.5% and -0.2% previously.
Considering that the year-on-year CPI was 7.8% by the end of 2023, the economy has been overheating to this point. As for his RBA’s monetary policy going forward, the question is the impact of a 300 basis point tightening on fixed rate borrowers whose loans will end this year.
The problem with measuring the potential impact of this dynamic is not the ability to drill down, but the data available at the macro level.
Households with significantly increased borrowing costs may build up large reserves or take other steps to deal with the situation. Or maybe not.
RBA collects data from major banks, giving it a better picture than other markets.
In any event, data coming in later this year could be very scrutinized as to the roll-off impact of these fixed-rate loans and whatnot.
AUD/USD seems more susceptible to global sentiment for now than the state of the domestic economy.
If the exchange rate continues to trade around this level, the current account balance and trade surplus should continue to contribute positively.
Tomorrow’s GDP data is expected to grow 0.7% q/q in the fourth quarter and 2.9% y/y through the end of 2023, according to a Bloomberg survey of economists.
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How to trade AUD/USD
AUD/USD Technical Analysis
Last week, the Australian dollar appeared to gain bearish momentum when it broke through the lower end of the uptrend channel.
There seems to be support for now near the previous low of 0.6688 when it traded to 0.6698. Support could fall further at previous lows of 0.6629 and 0.6585.
The decline has pushed the price below the 21-day Simple Moving Average (SMA)-based lower band. Bollinger Bands. Yesterday’s close was back inside the band, which could indicate a pause in bearish action or a potential reversal.
On the upside, resistance is likely at the breakpoints of 0.6856 and 0.6916 before the previous peaks of 0.7011 and 0.7030.
AUD/USD daily chart
Chart created with TradingView
— Written by DailyFX.com Strategist Daniel McCarthy
To contact Daniel, use the comments section below, or @DanMcCathyFX on Twitter