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Weak retail activity erased most of the Aussie’s gains last week. Can the bulls prop up the comdoll with this week’s potential catalysts?

Australia has a light data calendar but I’m sure the bulls and bears will find something to move the Aussie around.

Here are a few points they could focus on:

Quarterly inflation (Jan 27, 12:30 am GMT)

  • Prices jumped by 1.6% in Q3 2020 after falling by 1.9% in Q2. This pushed annualized prices back up to a 0.7% gain after showing a 0.3% dip in the previous quarter.
  • The report, as well as expectations of Australia opening its economy when the rest of the major economies are talking more lockdowns, helped push AUD to the top of the forex heap during the Asian session.
  • Faster inflation did little to change bets for more RBA easing, however.
  • Markets expect quarterly prices to dip to a 0.8% increase, with annualized prices inching up by 0.8%.
  • Slower-than-expected inflation can drag on AUD during the release though traders may eventually return to pricing in broader market themes.

Overall risk appetite

  • Biden’s ability to follow through with its fiscal stimulus proposals will factor a lot in the demand for risk-friendly assets like AUD
  • The U.S. Fed isn’t expected to make policy changes, but hints of policy shifts could be taken as cues for what other major central banks could be doing down the road.

Technical snapshot

  • Stochastic is flagging AUD’s “oversold” conditions against GBP
  • AUD remains in neutral territory against USD, JPY, and NZD
AUD Forex Pairs Stochastic from MarketMilk
AUD Forex Pairs Stochastic from MarketMilk
  • EMAs reflect AUD’s short-term bearish pressure against most of its major counterparts
  • AUD/CAD is bullish against both short and long-term EMAs on the daily
  • Watch out for retracement or reversal opportunities on AUD/NZD
AUD Forex Pairs EMAs from MarketMilk
AUD Forex Pairs EMAs from MarketMilk
  • The Aussie was most volatile against the euro and the safe-havens in the last seven days
AUD Forex Pairs Volatility from MarketMilk
AUD Forex Pairs Volatility from MarketMilk

Missed last week’s price action? Read AUD’s price recap for Jan. 18 – 22!