AUD/USD: bulls safe for now, awaiting Chinese data, will key support give?
- AUD/USD has made a minor correction ahead of a major support level.
- AUD/USD on the verge of a bearish breakout near the 5-month low achieved this November?
AUD/USD has moved into a consolidation of the minor recovery form 0.7551 lows and 0.7579 recent highs scored in the NY session. AUD/USD is trading at 0.7573, down -0.32% on the day, having posted a daily high at 0.7609 and low at 0.7552.
AUD/USD was pressured lower in the European shift on the back of copper falling down to a nine-day low of USD 6,761/tonne in Europe that went onto to push the Aussie to below 0.7555 as being the Nov 22nd in NY.
The Aussie recovered to 0.7578 in NY but the price remained below key technical levels even while the DXY dropped from 93.43 highs to 93.14. The yield differential meanwhile is a weight on the Aussie with US ten years rallying over 2% between 2.3188% - 2.3935%.
Fed's Williams: Fed should continue to raise rates slowly
As far as events, the Q3 US GDP (second reading) arrived +3.3% vs +3.2% expected. Also, Trump tweeted that major sanctions are coming. Yellen, speaking to and answering questions from Congress and had said that the Jobs market and economy were not significantly overheated. Yellen also said that the US economy and global expansions are "increasingly broad-based and how she expects gradual rate increases to sustain healthy labour market and to stabilise inflation around 2%. The beige book stated that price pressures have strengthened since last report. Fed's Williams said that Fed should continue to raise rates slowly
Next major event this week is U.S. PCE: "The PCE core deflator reached 1.91% last October and fell to 1.290% in August. This is the mystery of which Yellen speaks, and one in which her working hypothesis is that is it due to short-term one-off factors. The core deflator is expected to rise to 1.4% in October. The bond market will be sensitive to any surprise, and through it, the dollar," explained analysts at Brown Brothers Harriman.
For Asia, China comes out with the November PMI official figures. There will be a good deal of attention paid here considering the recent bearishness around the economy.
From a technical point of view, Valeria Bednarik, chief analyst at FXStreet explained that, in the short term, the risk is lean towards the downside, given that in the 4 hours chart, the 20 SMA gains bearish momentum above the current level, while technical indicators maintain their bearish strength within a negative territory. "The pair has bottomed this month at 0.7531, the level to break to confirm a new leg lower towards 0.7450, a strong long-term static support."