The dollar is still the king of the hill, following last Friday’s jaw-dropping NFP report.
Can the U.S. currency keep holding on to its gains today?
Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Australia’s MI inflation gauge slowed from 1.0% m/m gain in December to a meager 0.3% uptick in January 2024
New Zealand ANZ commodity prices dipped from 2.4% month-over-month to 2.2% in January despite increase in butter prices
Fed head Jerome Powell reiterates that they are on track to cut interest rates this year with inflation slowing down
Australia’s ANZ job advertisements increased from upgraded 0.6% monthly uptick in December to 1.7% gain in January, suggesting stronger hiring prospects down the line
Australian goods trade surplus narrowed from upgraded 11.76B AUD to 10.96B AUD in December as exports rose 1.8% while imports grew 4.8%
Chinese Caixin services PMI fell from 52.9 to 52.7 vs. 53.0 forecast for January, reflecting slower pace of industry growth
Price Action News
Overlay of USD vs. Major Currencies Chart by TradingView
The Greenback pulled off a mighty strong finish on Friday, thanks to a much stronger than expected U.S. jobs report that reinforced the “higher for longer” interest rate outlook.
Not even Fed head Powell’s remarks during his interview with 60 Minutes earlier today was enough to derail the dollar from its climb, but it’s worth noting that he reiterated the possibility of easing later this year due to slowing inflation.
The U.S. dollar still managed to squeeze out a few more gains against its lower-yielding rivals like the yen and franc.
Upcoming Potential Catalysts on the Economic Calendar:
U.S. ISM services PMI at 3:00 pm GMT
BOE MPC member Pill’s speech at 5:30 pm GMT
FOMC member Bostic’s testimony at 7:00 pm GMT
Japanese average cash earnings and household spending at 11:30 pm GMT
RBA monetary policy decision at 12:30 am GMT (Feb. 6)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! ️
AUD/USD: 15-min
AUD/USD 15-min Forex Chart by TradingView
Dollar demand is still the name of the game so far, as risk-off flows are also in play to drag higher-yielding currencies south.
After all, China just printed a weaker than expected Caixin services PMI which reflected a slower pace of industry growth. Not even the RRR cut from the PBOC seemed enough to prop up the Aussie, as this move was already announced way back.
AUD/USD already fell sharply after last Friday’s NFP release but seems to be finding some support at .6485 and is in the middle of a pullback.Applying the Fib tool on the latest move shows that the 38.2% level is near the pivot point (.6540) that might be enough to attract sellers.
If so, the pair could resume its slide and fall back to the swing low or even the next downside targets at S1 (.6470) then S2 (.6430).
Don’t forget that Uncle Sam has the ISM services PMI lined up in today’s New York session, although the price reaction could be muted unless it aligns with hawkish Fed expectations.
Also, the RBA is gearing up to make its interest rate decision in the next Asian session, so AUD/USD might be in for a lot of volatility!
