Analysis of AUD/USD (October 18, 2023)

Create at 1 month ago (Oct 18, 2023 10:05)

AUD/USD Pair Shows Two-Day Increase; Attention Shifts to Chinese Economic Indicators

The AUD/USD pair saw a two-day increase, indicating a recovery from the 0.6285 level. On Tuesday, the Australian dollar received support against a stronger USD following the release of RBA meeting minutes, which suggested the potential for future rate hikes. Despite initially pulling back in response to positive US data, including Retail Sales figures, the AUD/USD pair later achieved new highs. However, the pair faced resistance from favorable US economic data, and focus shifted to an upcoming speech by RBA Governor Bullock and crucial Chinese economic indicators.

The Australian dollar's recent performance has been influenced by the weakened Chinese economy, despite stimulus efforts. The upcoming Chinese GDP report is expected to introduce volatility to the AUD/USD pair. Notably, Australia's major export, iron ore, experienced a rally, contributing to the upside for the Australian dollar.

The Reserve Bank of Australia (RBA), recently contemplated a potential increase in interest rates during its October 3 policy meeting. The primary concern outlined in the minutes was that inflation was not slowing as anticipated, raising the possibility of a rate hike in November.

The RBA currently assumes that inflation will not reach its 2-3% target band until late 2025. In the second quarter, consumer price inflation stood at an annual 6%, and it remained at 5.2% in August. Despite a substantial 400 basis points increase in rates, the full effects of this tightening were yet to be realized, according to the RBA.

Concerns were raised about the recent surge in petrol prices potentially impacting inflation expectations, while progress in lowering services inflation was deemed sluggish. The board highlighted that additional data on economic activity, inflation, and the labor market, would be available before the November meeting.

In the broader economic context, the U.S. dollar, despite facing challenges for further advancement, remained resilient. Strong U.S. retail sales data did not propel the dollar significantly, as attention shifted to Chinese growth figures and escalating violence in the Middle East.

U.S. yields, on the other hand, experienced a notable increase after robust retail sales data, indicating the enduring strength of the U.S. economy. Despite this, the dollar did not see a commensurate boost, leading some to suggest a potential loss of momentum in its recent upward trend.

Market participants are closely monitoring speeches by Federal Reserve officials for insights into interest rate policy. The overall sentiment suggests uncertainty about the impact of higher long-term borrowing costs on demand and its implications for future rate decisions by the central bank. Diplomatic efforts to resolve the Israel-Hamas conflict have alleviated risk aversion in global markets, adding further positivity to the AUD. Consequently, it is expected that the Australian dollar will maintain its stability in the near future, with the potential for modest gains contingent on favorable economic data and the global context.

Data for Technical Analysis (30Min) CFD AUD/USD

Resistance : 0.6377, 0.6380, 0.6386

Support : 0.63650.63620.6356

30Min Outlook    

Analysis of AUD/USD Source:

Buy/Long 1 If the support at the price range 0.6360 - 0.6365 is touched, but the support at 0.6365 cannot be broken, the TP may be set around 0.6381 and the SL around 0.6355, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 0.6377 - 0.6382, TP may be set around 0.6393 and SL around 0.6360, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 0.6377 - 0.6382 is touched, but the resistance at 0.6377 cannot be broken, the TP may be set around 0.6366 and the SL around 0.6387, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 0.6360 - 0.6365, TP may be set around 0.6353 and SL around 0.6382, or up to the risk appetite.       

Pivot Points Oct 18, 2023 02:47AM GMT

Name S3 S2 S1 Pivot Points R1 R2 R3
Classic 0.6351 0.6356 0.6366 0.6371 0.6381 0.6386 0.6396
Fibonacci 0.6356 0.6362 0.6365 0.6371 0.6377 0.6380 0.6386
Camarilla 0.6372 0.6373 0.6375 0.6371 0.6377 0.6379 0.6380
Woodie's 0.6353 0.6357 0.6368 0.6372 0.6383 0.6387 0.6398
DeMark's - - 0.6368 0.6372 0.6384 - -

Sources: InvestingDailyFX

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