Published on Jun 15, 2023

Daily Analysis For AUD/USD 15-06-2023

AUD/USD Analysis

Key Points: -

· The Australian Dollar/US Dollar (AUD/USD) pair experienced an increase in demand around the 0.6800 level, as the strong labor market conditions in Australia provide support for potential interest rate hikes by the Reserve Bank of Australia (RBA).

· During the European trading session, there have been significant losses in the S&P500 futures market due to the cautious sentiment triggered by the Federal Reserve's hawkish dot plot, indicating a more aggressive stance on monetary policy.

· The commerce ministry of China has made remarks suggesting that efforts are being made to resolve the ongoing disputes with Australia.

Today's Scenario: -

The AUD/USD pair has rebounded from the support level of 0.6800 during the European session, indicating a recovery. The Australian currency is gaining attention as the US Dollar Index (DXY) faces selling pressure around 103.40.

In Europe, there have been notable losses in S&P500 futures due to a hawkish dot plot released by the Federal Reserve (Fed), which has raised caution among investors. The Fed's indication of a potentially more aggressive monetary policy approach has failed to inspire optimism as uncertainty lingers.

Fed Chair Jerome Powell refrained from declaring victory over inflation, acknowledging the persistence of core inflation caused by tight labor market conditions and strong consumer demand. Alongside the dot plot announcement, Powell confirmed two additional interest rate hikes for this year and emphasized that rate cuts are not appropriate.

The US Dollar Index (DXY) has fallen below 103.20 as risk-sensitive currencies gain favor. Market participants will closely monitor the release of US monthly Retail Sales data (May) later today, which is expected to show a contraction of 0.1% compared to the 0.4% expansion recorded in April.

Positive Employment data in Australia has strengthened the case for further interest rate hikes by the Reserve Bank of Australia (RBA). In May, the Australian economy added an impressive 75.9K jobs, surpassing the consensus estimate of 15K. The previous month saw a reduction of 4.3K jobs. The Unemployment Rate also declined to 3.6%, surpassing expectations and the previous reading of 3.7%.

Regarding Australia's relationship with China, the commerce ministry of China has expressed a willingness to resolve disputes between the two nations. The focus now shifts to fostering long-term development in Australian-Chinese relations, aiming to find common ground while respecting differences. It is important to note that China is Australia's largest trading partner, and improved relations would have a positive impact on the Australian Dollar.

Diagram of AUD/USD: -

Economic Events: -

Date Event Impact Currency

0:00 (United States) Fed Press Conference High USD

4:15 (New Zealand) GDP Growth Rate YoY Medium NZD

4:15 (New Zealand) GDP Growth Rate QoQ Medium NZD

5:20 (Japan) Foreign Bond Investment Low JPY

5:20 (Japan) Stock Investment by Foreigners Low JPY

5:20 (Japan) Machinery Orders YoY Medium JPY

5:20 (Japan) Machinery Orders MoM Medium JPY

5:20 (Japan) Imports YoY Low JPY

5:20 (Japan) Balance of Trade High JPY

5:20 (Japan) Exports YoY Medium JPY

5:30 (Euro Area) Eurogroup Meeting Medium EUR

7:00 (Australia) Consumer Inflation Expectations Low AUD

7:00 (Australia) Part Time Employment Chg Medium AUD

7:00 (Australia) Participation Rate Low AUD

7:00 (Australia) Full Time Employment Chg Medium AUD

7:00 (Australia) Unemployment Rate High AUD

7:00 (Australia) Employment Change High AUD

7:00 (Australia) RBA Bulletin Medium AUD

7:00 (China) PBoC 1-Year MLF Announcement Low CNY

7:00 (China) House Price Index YoY Medium CNY

7:30 (China) Unemployment Rate High CNY

7:30 (China) Retail Sales YoY High CNY

7:30 (China) Industrial Production YoY High CNY

7:30 (China) Fixed Asset Investment (YTD) YoY Medium CNY

9:05 (Japan) 3-Month Bill Auction Low JPY

10:00 (Japan) Tertiary Industry Index MoM Low JPY

10:00 (Netherlands) Unemployment Rate Medium EUR

10:30 (Finland) GDP YoY Low EUR

12:00 (Switzerland) Producer & Import Prices MoM Low CHF

12:00 (Switzerland) Producer & Import Prices YoY Low CHF

12:15 (France) Inflation Rate MoM Medium EUR

12:15 (France) Inflation Rate YoY Medium EUR

12:15 (France) Harmonised Inflation Rate MoM Low EUR

12:15 (France) Harmonised Inflation Rate YoY Low EUR

13:30 (Spain) Balance of Trade Medium EUR

14:10 (Spain) Obligacion Auction Low EUR

14:10 (Spain) Bonos Auction Low EUR

14:30 (Euro Area) Balance of Trade Medium EUR

14:30 (France) 5-Year OAT Auction Low EUR

14:30 (France) 3-Year OAT Auction Low EUR

14:30 (Greece) Construction Output YoY Low EUR

14:30 (Montenegro) Inflation Rate YoY Low EUR

14:30 (Montenegro) Harmonised Inflation Rate YoY Low EUR

14:30 (Montenegro) Inflation Rate MoM Low EUR

15:00 (Belgium) Construction Output YoY Low EUR

15:30 (France) 10-Year Index-Linked OAT Auction Low EUR

15:30 (Ireland) Balance of Trade Low EUR

16:00 (Portugal) Economic Activity YoY Low EUR

16:00 (Portugal) Private Consumption YoY Low EUR

17:45 (Canada) Housing Starts Medium CAD

17:45 (Euro Area) ECB Interest Rate Decision High EUR

17:45 (Euro Area) Marginal Lending Rate Low EUR

17:45 (Euro Area) Deposit Facility Rate High EUR

18:00 (Canada) Manufacturing Sales MoM Low CAD

18:00 (United States) Import Prices YoY Low USD

18:00 (United States) Export Prices YoY Low USD

18:00 (United States) Import Prices MoM Medium USD

18:00 (United States) Export Prices MoM Medium USD

18:00 (United States) NY Empire State Manufacturing Index Medium USD

18:00 (United States) Retail Sales YoY High USD

18:00 (United States) Retail Sales Ex Autos MoM High USD

18:00 (United States) Retail Sales MoM High USD

18:00 (United States) Philly Fed Business Conditions Low USD

18:00 (United States) Philly Fed Employment Low USD

18:00 (United States) Philly Fed CAPEX Index Low USD

18:00 (United States) Philly Fed Prices Paid Low USD

18:00 (United States) Philly Fed New Orders Low USD

18:00 (United States) Philadelphia Fed Manufacturing Index Medium USD

18:00 (United States) Jobless Claims 4-week Average High USD

18:00 (United States) Continuing Jobless Claims High USD

18:00 (United States) Initial Jobless Claims High USD

18:00 (United States) Retail Sales Ex Gas/Autos MoM High USD

18:15 (Euro Area) ECB Press Conference High EUR

18:30 (Belgium) Balance of Trade Low EUR

18:30 (Kosovo) GDP Growth Rate YoY Low EUR

18:45 (United States) Capacity Utilization Low USD

18:45 (United States) Manufacturing Production YoY Low USD

18:45 (United States) Industrial Production YoY Medium USD

18:45 (United States) Industrial Production MoM Medium USD

18:45 (United States) Manufacturing Production MoM Low USD

19:30 (United States) Business Inventories MoM Medium USD

19:30 (United States) Retail Inventories Ex Autos MoM Low USD

20:00 (United States) EIA Natural Gas Stocks Change Low USD

21:00 (United States) 8-Week Bill Auction Low USD

21:00 (United States) 4-Week Bill Auction Low USD

21:05 (United Kingdom) BoE Cunliffe Speech Low GBP

21:30 (Canada) 2-Year Bond Auction Low CAD

21:30 (United States) 15-Year Mortgage Rate Low USD

21:30 (United States) 30-Year Mortgage Rate Low USD

Buy Scenario: -

Conversely, a recovery in AUD/USD would require weak US data and reduced likelihood of a July rate hike by the Federal Reserve. In such a scenario, the pair may aim for the key resistance line originating from mid-April, which is in proximity to 0.6835.

Subsequently, a potential rally towards the December 2022 peak around 0.6895, followed by the psychological level of 0.6900, cannot be ruled out. Till we do not advise to buy AUD/USD.

Sell Scenario: -

Despite positive employment and inflation data in Australia, as well as disappointing economic figures from China early on Thursday, the AUD/USD pair is struggling to find support. As of now, it remains undecided near 0.6795, testing a short-term support line.

From a technical perspective, there is an upward-sloping trend line since June 5, currently around 0.6785, which is preventing immediate downside for the AUD/USD pair. However, the overbought RSI (14) line suggests possible pullback moves.

Nevertheless, if the mentioned support line is convincingly broken, the AUD/USD pair could be exposed to further declines, targeting the mid-May swing high around 0.6710 before potentially reaching the 200-day Simple Moving Average (SMA) level near 0.6655. Till we do not advise to sell AUD/USD.