Australian Dollar, Westpac Consumer Confidence, AUD/USD, Covid -Talking Points
- Asia Pacific Markets face muted open as traders brace for hard-hitting economic data
- Australia set to ease lockdown measures but possible travel bubble may be in the works
- AUD/USD is gyrating around its 20-day SMA as the pair attempts to break triangle resistance
Wednesday’s Asia-Pacific Outlook
Asia-Pacific markets may see a muted open on Wednesday as several potentially high-impact economic events approach. On Wall Street, traders appeared hesitant to pick a direction, with the benchmark S&P 500 index closing nearly unchanged at +0.02% Tuesday, although small-cap stocks outperformed. The safe-haven US Dollar strengthened modestly against a basket of its major FX peers.
Traders are bracing for US inflation figures set to cross the wires later this week, with the economic print having the potential to send shockwaves through global markets. According to the DailyFX Economic Calendar, analysts expect the core inflation rate – the Federal Reserve’s preferred metric, which excludes volatile items like food and energy prices – to cross the wires at 3.4% on a year-over-year basis for May.
Today’s trading session will see Australia’s Westpac consumer confidence reading for June cross the wires. While last month’s print fell from its highest level since September 2010, Australian consumers are likely to remain confident as Covid restrictions continue to ease and cross-border travel ramps up further. A strong Westpac figure may underpin the Australian Dollar in the short term.
Speaking of Australia, the Victorian government is set to ease lockdown measures later this week, barring no unexpected Covid cases pop up. However, the Sydney Morning Herald reported, per an anonymous source, that a bubble of 25 kilometers will be placed for travel on Melburnians. Details are expected to be released later today, but the expected restrictions will bar travel during the Queen’s Birthday holiday.
Crude oil prices rose overnight, closing above 70 for the first time since October 2018 as traders continued to bet on the global economic reopening. The US Energy Information Administration (EIA) will release inventory numbers tomorrow, with an expected draw of 3.5 million barrels for the week ending June 4, which would be the third consecutive weekly decline in stock levels.
Elsewhere, New Zealand reported Q1 manufacturing sales at 4.2% for the first quarter. ANZ business confidence for June will follow later in the day for the island nation. China will release inflation figures for last month, which could spur some movement in the Yuan, or perhaps broader sentiment should an outsized miss or beat crosses the wires. The consensus expectation is a 1.6% rise on a year-over-year basis.
Speaking of China, the United States passed a bipartisan bill to bolster its competitive advantage over China targeting computer chips, military hardware, and space exploration late Tuesday. The United States Innovation and Competition Act will likely fuel ongoing tensions between the world’s two largest economies. The bill must now pass the lower house of Congress before moving to President Joe Biden’s desk.
AUD/USD Technical Outlook:
The Australian Dollar is struggling to break higher from a Descending Triangle’s upper bound as it gyrates around the 20-day Simple Moving Average (SMA). The 38.2% Fibonacci retracement level also appears to be providing a level of contention. Both the MACD and RSI oscillators are trending neutrally, but the 50-day SMA appears to be moving toward a possible bullish cross above the 20-day SMA.
AUD/USD Daily Chart
Chart created with TradingView
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--- Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwateron Twitter