Australian dollar, AUD / USD, energy, inflation – topics of conversation
- Australian dollar starts cautiously after AUD / USD rose over 0.50% last week
- Prevailing risk trends can drive price actions with little economic background
- AUD / USD appears to be holding above the 50-day Simple Moving Average (SMA) on Monday
Asia-Pacific forecast from Monday
Asia Pacific markets appear to be set for a higher Monday as the trading week begins. There isn’t much event risk today, with a rather sparse economic calendar. That leaves markets vulnerable to the prevailing risk trends of the past week when an agreement on the US debt ceiling stimulated some risk appetite in the markets. The risk sensitive Australian dollar is cautiously moving higher against the US dollar. The AUD / USD was up over half a percent last week.
Given the lack of economic events on today’s list, traders will keep an eye on the upcoming events that are coming up later this week. This includes inflation data from China, New Zealand and the United States, UK GDP, Australian and American consumer confidence, and US retail sales. Corporate America will also begin another quarterly earnings season. Investors will analyze the earnings reports for clues as to what companies think about the global economic outlook and perhaps most critical of inflation.
New South Wales (NSW), Australia’s most populous state, will lift some Covid-19 restrictions today, marking the first step in reopening the state after a hundred-day lockdown. The state achieved a vaccination rate of over 70%. Easing travel restrictions will be the next big step, with a possible reopening slated for November.
Elsewhere, energy prices will remain in focus after rising natural gas and coal prices fueled more aggressive outlook for global inflation. US natural gas prices reached their highest level since 2014 last week. China recently ordered coal-fired power plants to step up output to combat the huge surge in energy prices that has led politicians to cut production to save electricity. According to Reuters news, Chinese energy providers are also allowed to temporarily increase customer tariffs.
AUD / USD technical forecast
AUD / USD is trading just above its 50-day Simple Moving Average (SMA) after rising 0.69% last week. Despite last week’s strength, prices remain nearly 2% lower from September’s swing high. Bulls will try to keep prices above the 50-day SMA. Otherwise, falling below the moving average will jeopardize trendline support that has capped prices in recent weeks.
AUD / USD 8 hour chart
Diagram created with TradingView
— Written by Thomas Westwater, Analyst for DailyFX.com
Get in touch Thomas, use the comments section below or @FxWestwateron twitter