Daily Analysis For AUD/USD  12-06-2023

Daily Analysis For AUD/USD 12-06-2023

AUD/USD Analysis


Key Points: -


·       The AUD/USD pair is currently consolidating its significant gains from recent weeks, reaching a one-month high on Friday.


·       However, concerns about the global economic slowdown and moderate strength in the USD are limiting the pair's upward momentum.


·       Nevertheless, the Reserve Bank of Australia's (RBA) hawkish outlook continues to support the AUD/USD pair, acting as a favorable factor ahead of the data and event risks scheduled for this week.


Today's Scenario: -


The AUD/USD pair is currently in a bullish consolidation phase at the beginning of the week, trading within a narrow range just below the mid-0.6700s, which represents a one-month high reached on Friday. However, despite the positive momentum, bulls are waiting for the pair to sustain strength above the 100-day Simple Moving Average (SMA) before entering new positions and anticipating further upward movement.


The recent surprise 25 basis points rate hike by the Reserve Bank of Australia (RBA), along with a more hawkish policy statement, continues to support the Australian Dollar (AUD). RBA Governor Lowe defended the rate increase, emphasizing the need to curb inflation by potentially raising interest rates further. This supportive stance acts as a tailwind for the AUD/USD pair. Nevertheless, several factors are currently holding back bulls from taking aggressive positions, which is capping the pair's upside potential for the time being.


Concerns about a global economic downturn, particularly in China, contribute to the strength of the safe-haven US Dollar (USD) and limit gains for the Australian Dollar, which is often seen as a proxy for China. However, further upward movement for the USD is expected to be limited due to uncertainty surrounding the Federal Reserve's next policy decision. Recent dovish comments from Fed officials have reinforced expectations of a pause in the central bank's tightening cycle. Although the markets still price in the possibility of another 25 basis points rate hike in July.


As a result, all eyes are on the highly-anticipated two-day FOMC monetary policy meeting scheduled for Wednesday. Investors will closely analyze the outcome of the meeting for insights into the Fed's near-term policy outlook, which will heavily influence the dynamics of the USD and determine the next direction for the AUD/USD pair. Additionally, the release of US consumer inflation figures on Tuesday is expected to introduce volatility to the markets, creating short-term trading opportunities for the major currency pair.

Diagram of AUD/USD: -

Economic Events: -


Date      Event                                                                                        Impact             Currency

4:15      (New Zealand) Electronic Retail Card Spending YoY    Low     NZD

4:15      (New Zealand) Electronic Retail Card Spending MoM  Low     NZD

5:20      (Japan) PPI YoY                                                                            Low             JPY

5:20      (Japan) PPI MoM                                                            Low           JPY

5:31      (Ireland) Construction PMI                                             Low          EUR

10:30    (Finland) Current Account                                             Low          EUR

11:30    (Japan) Machine Tool Orders YoY                                Low         JPY

12:30    (Slovakia) Construction Output YoY                              Low         EUR

13:30    (China) Total Social Financing                                                    Low           CNY

13:30    (China) New Yuan Loans                                                          Low CNY

13:30    (China) M2 Money Supply YoY                                                   Low           CNY

13:30    (China) Outstanding Loan Growth YoY                                      Low          CNY

13:30    (Switzerland) Myfxbook USDCHF Sentiment      Medium         CHF

13:30    (Australia) Myfxbook AUDUSD Sentiment         Medium         AUD

13:30    (Japan) Myfxbook USDJPY Sentiment                               Medium          JPY

13:30    (European Union) Myfxbook EURUSD Sentiment            Medium         EUR

13:30    (United Kingdom) Myfxbook GBPUSD Sentiment            Medium         GBP

13:30    (Canada) Myfxbook USDCAD Sentiment                          Medium           CAD

13:30    (New Zealand) Myfxbook NZDUSD Sentiment                 Medium         NZD

15:15    (European Union) EU Bond Auction                             Low          EUR

15:15    (European Union) 15-Year Bond Auction                                  Low          EUR

18:30    (Ecuador) Balance of Trade                                                       Low            USD

18:30    (France) 3-Month BTF Auction                                                 Low            EUR

18:30    (France) 12-Month BTF Auction                                               Low            EUR

18:30    (France) 6-Month BTF Auction                                                 Low            EUR

20:30    (Kosovo) Inflation Rate YoY                                                       Low            EUR

20:30    (United States) Consumer Inflation Expectations                    Low         USD

21:00    (United States) 6-Month Bill Auction                                        Low          USD

21:00    (United States) 3-Year Note Auction                                         Low          USD

22:30    (United States) 3-Month Bill Auction                                        Low          USD

22:30    (United States) 10-Year Note Auction                                       Low          USD

23:30    (United States) Monthly Budget Statement       Medium        USD



Buy Scenario: -


The AUD/USD pair is experiencing its third consecutive day of gains and has reached a new one-month high during the early European session on Monday. It is currently trading around the 0.6760-0.6765 region, up more than 0.25% for the day. The pair has confirmed a bullish breakout by crossing above the 100-day Simple Moving Average (SMA), which is a significant technical signal.


The Australian Dollar (AUD) is benefiting from the Reserve Bank of Australia's (RBA) unexpected 25 basis points rate hike last week and a more hawkish policy statement. Additionally, the positive sentiment in equity markets is weighing on the safe-haven US Dollar (USD) and supporting the risk-sensitive Aussie. However, a slight increase in US Treasury bond yields may limit USD losses and restrain the AUD/USD pair.


Concerns about a global economic slowdown, particularly in China, could also limit gains for the AUD and prevent significant declines in the USD. Traders may exercise caution and wait for the release of crucial US consumer inflation data on Tuesday before making aggressive moves. The market will closely watch the highly-anticipated FOMC decision on Wednesday, which could provide further direction for the AUD/USD pair.


Given the current fundamental backdrop, it would be prudent to wait for sustained strength above the 0.6800 level before considering further upward moves. If this level is surpassed, the pair may gain momentum and target the next resistance zone around 0.6865-0.6870, followed by the psychological level of 0.6900. Bulls may eventually aim to reclaim the 0.7000 level, with an intermediate hurdle around 0.6970-0.6975. Till we do not advise to buy AUD/USD.


Sell Scenario: -


On the downside, the immediate support is around the 0.6735 area, which coincides with the 100-day SMA. If this support is breached, the pair could test the 0.6700 level, followed by the crucial 200-day SMA around 0.6680. Failure to defend these support levels may trigger technical selling and leave the AUD/USD pair vulnerable. In such a scenario, the pair could decline further towards the 0.6645 support and potentially retest the round-figure mark of 0.6600. Till we do not advise to sell AUD/USD.


Support and Resistance Level: -

 Support               Resistance  

 S1 0.6706    -      R1 0.6764

 S2 0.6671   -       R2 0.6786

 S3 0.6649   -       R3 0.6822


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