Market watchers seem to be pricing in an earlier RBA hike after the central bank printed its meeting minutes.
Will FOMC rhetoric derail this pair’s rally, though?
Before moving on, ICYMI, yesterday’s watchlist looked at NZD/JPY’s trend line breakdown on risk-off flows. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
FOMC official Bullard emphasizes need to “frontload removal of accommodation”
Concerns of Russian invasion on Ukraine weighs on risk assets but lifts oil and goldRBA minutes: Progress being made on targets but need to see wage acceleration
CBA now expecting RBA hike in June vs. previous forecast in August
New Zealand visitor arrivals up 16% vs. previous 44% jump
Japanese preliminary GDP at 1.3% vs. 1.5% forecast
PBoC issued one-year medium-term lending facility for 300B CNY
BOJ Governor Kuroda: No reason to change loose monetary policy
Kuroda: BOJ won’t deploy operation to defend yield target frequently
U.K. claimant count fell 31.9K vs. projected 36.2K drop
U.K. average earnings index up from 4.2% to 4.3% vs. projected 3.8% reading
Upcoming Potential Catalysts on the Forex Economic Calendar:
Eurozone and German ZEW economic sentiment at 10:00 am GMT
Eurozone flash GDP q/q at 10:00 am GMT
U.S. headline and core PPI at 1:30 pm GMT
Empire State manufacturing index at 1:30 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: AUD/USD
The RBA just released the transcript of their latest monetary policy huddle, revealing that central bankers were not as anxious as suggested in their official statement.As it turns out, policymakers are more open to the idea of tightening monetary policy since they are seeing green shoots in the Australian economy. However, they did reiterate they’d like to see more signs of wage acceleration.
This might be enough to keep AUD/USD above its rising trend line support on the hourly chart, especially with the 100 SMA still above the 200 SMA to reflect bullish energy.
In that case, the pair could still make its way back up to the latest highs around the .7250 minor psychological mark.
However, Stochastic looks eager to head south from the overbought zone, indicating a pickup in bearish pressure. I’d stay on the lookout for a move below the .7100 handle to see if a reversal from the climb is in order.Also, headlines revealing that the tension between Russia and Ukraine is escalating might bring more risk-off flows to the mix, which might be AUD bearish.
The U.S. PPI release later in the New York session could be worth watching as well since strong underlying inflation might remind traders that some FOMC members are pushing for more aggressive tightening.