Daily Analysis For AUD/USD  13-06-2023

Daily Analysis For AUD/USD 13-06-2023

AUD/USD Analysis


Key Points: -


·       The AUD/USD pair strengthens as it reaches a new high for the day, benefiting from the broad weakness of the US Dollar and cautious optimism in the market.

·       The People's Bank of China (PBoC) reduces the benchmark Repo Rate to 1.9%, leading to an improvement in market sentiment, particularly as investors anticipate a dovish stance from the Federal Reserve.

·       Recent economic data from Australia has shown a mixed performance, but market participants are optimistic due to expectations of lower-than-expected US inflation and the possibility of the Federal Open Market Committee (FOMC) maintaining its current interest rate stance.


Today's Scenario: -


The AUD/USD pair continues to rise, reaching a new high near 0.6765 during Tuesday's European session, supported by the market's cautious optimism and positive sentiment following the rate cut by the People's Bank of China (PBoC). The US Dollar is under pressure as the likelihood of a hawkish move by the Federal Reserve during Wednesday's FOMC meeting diminishes, improving market sentiment.


According to the CME's FedWatch Tool, there is a more than 70% chance that the Fed will maintain its current policy on Wednesday, with nearly 80% odds favoring a 0.25% rate increase in July.


The PBoC's decision to lower the Repo Rate from 2.0% to 1.9% confirms concerns about slower economic growth in China, the world's largest industrial player. Bloomberg reports that the rate cut is intended to support the country's economic recovery.


In Australia, Westpac Consumer Confidence for June improved to 0.2% compared to an expected reading of 0.0% and a previous figure of -7.9%. However, sentiment figures from the National Australia Bank (NAB) for May were weaker, which could have a dampening effect on buyer sentiment for the Aussie pair.


It is important to note that concerns over escalating tensions between the US and China may have posed challenges for AUD/USD bulls. On Monday, the US expanded its import ban from Xinjiang, and China has vowed to protect its firms against any US sanctions. Additionally, US Treasury Secretary Janet Yellen's prepared remarks for her testimony in front of the House Financial Services Committee highlighted concerns about non-transparent and unsustainable lending practices, particularly from China, emphasizing the importance of institutions like the IMF and the World Bank as counterweights.


Overall, the RBA's unexpected hawkish stance contrasts with the dovish bias of the Fed, giving hope to AUD/USD buyers in a relatively quiet market environment ahead of key data releases and events.


Traders of AUD/USD should pay attention to today's US Consumer Price Index (CPI) figures for May, as the upcoming Fed decision on Wednesday is expected to result in no change to interest rates. The market focus will be on the Core CPI MoM figure, which is forecasted to show no change from the previous reading of 0.4%. Softer figures could delay concerns about a rate hike in July and may prevent the Fed from sounding hawkish.


Diagram of AUD/USD: -

Economic Events: -


Date    Event                                                                                                                Impact    Currency

4:15     (New Zealand) Visitor Arrivals YoY                                                        Low      NZD

5:20     (Japan) BSI Large Manufacturing QoQ                                                Low      JPY

6:00     (Australia) Westpac Consumer Confidence Change                       High     AUD

6:00     (Australia) Westpac Consumer Confidence Index                           High     AUD

7:00     (Australia) NAB Business Confidence                                                 High     AUD

11:30   (Germany) Harmonised Inflation Rate MoM                                        Low      EUR

11:30   (Germany) Harmonised Inflation Rate YoY                                           Low      EUR

11:30   (Germany) Inflation Rate MoM                                                         Medium      EUR

11:30   (Germany) Inflation Rate YoY                                                            Medium      EUR

11:30   (Germany) CPI                                                                                             High      EUR

11:30   (United Kingdom) Average Earnings excl. Bonus (3Mo/Yr)              Low      GBP

11:30   (United Kingdom) Average Earnings incl. Bonus (3Mo/Yr)       Medium      GBP

11:30   (United Kingdom) Unemployment Rate                                               High      GBP

11:30   (United Kingdom) Claimant Count Change                                         High      GBP

11:30   (United Kingdom) Employment Change                                               High      GBP

11:30   (United Kingdom) HMRC Payrolls Change                                           Low      GBP

12:30   (Lithuania) Current Account                                                                    Low      EUR

12:30   (Spain) CPI                                                                                                  High      EUR

12:30   (Spain) Core Inflation Rate YoY                                                              Low       EUR

12:30   (Spain) Harmonised Inflation Rate MoM                                             Low       EUR

12:30   (Spain) Harmonised Inflation Rate YoY                                                Low       EUR

12:30   (Spain) Inflation Rate MoM                                                                     Low       EUR

12:30   (Spain) Inflation Rate 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

14:10   (Spain) 3-Month Letras Auction                                                             Low       EUR

14:30   (Euro Area) ZEW Economic Sentiment Index                            Medium        EUR

14:30   (Germany) ZEW Economic Sentiment Index                                    High        EUR

14:30   (Germany) ZEW Current Conditions                                                    Low        EUR

14:30   (United Kingdom) 10-Year Treasury Gilt Auction                             Low        GBP

14:40   (Italy) 3-Year BTP Auction                                                                     Low         EUR

14:40   (Italy) 7-Year BTP Auction                                                                     Low         EUR

14:40   (Italy) 30-Year BTP Auction                                                                  Low         EUR

15:00   (Germany) 5-Year Bobl Auction                                                          Low          EUR

15:15   (Euro Area) ECB Enria Speech                                                            Low          EUR

15:30   (Latvia) Current Account                                                                      Low         EUR

15:30   (United States) NFIB Business Optimism Index                            Low          USD

17:30   (Ecuador) Balance of Trade                                                                 Low          USD

18:00   (United States) Core Inflation Rate MoM                                 Medium          USD

18:00   (United States) Inflation Rate MoM                                                 High          USD

18:00   (United States) Core Inflation Rate YoY                                          High          USD

18:00   (United States) Inflation Rate YoY                                                    High          USD

18:00   (United States) CPI                                                                               High          USD

18:00   (United States) CPI s.a                                                                        High          USD

18:15   (Germany) Current Account                                                                Low          EUR

18:25   (United States) Redbook YoY                                                             Low          USD

19:30   (United Kingdom) BoE Gov Bailey Speech                              Medium         GBP

20:30   (United Kingdom) BoE Dhingra Speech                                         Low          GBP

21:00   (United States) 52-Week Bill Auction                                              Low          USD

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



Buy Scenario: -


From a technical perspective, the overnight close above the 100-day Simple Moving Average (SMA) signals a bullish trigger for traders. The subsequent upward movement on Tuesday confirms the positive setup, supported by positive oscillators on the daily chart, which suggests further potential for appreciation in the near term. As a result, there is a possibility of continued strength beyond the 0.6800 level, with a potential test of the May monthly high around the 0.6815-0.6820 region, particularly ahead of the release of US consumer inflation figures. Till we do not advise to buy AUD/USD.


Sell Scenario: -


On the downside, the 100-day SMA, currently around the 0.6735-0.6730 area, acts as immediate support, followed by the key level of 0.6700. Additionally, the crucial 200-day SMA, located around the 0.6680 area, could trigger some technical selling if breached, potentially making the AUD/USD pair vulnerable to further downside. In such a scenario, spot prices may experience an accelerated decline below the intermediate support at 0.6645, targeting a retest of the round-figure mark at 0.6600. A convincing break below the 0.6600 level would shift the bias in favor of bearish traders. Till we do not advise to sell AUD/USD.


Support and Resistance Level: -

 Support              Resistance  

 S1 0.6730   -     R1 0.6772

 S2 0.6710  -      R2 0.6794

 S3 0.6688  -      R3 0.6814


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