AUD/USD just broke above a multi-month range.
Will the breakout lead to more upside momentum for the Aussie?
Before moving on, ICYMI, today’s Daily Asia-London Session Watchlist looked at ETH/USD for a short-term buying opportunity after a strong selloff. Be sure to check that out to see if there is still a potential play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
- British retailers say closures and job losses still a risk despite lockdown easing
- Japan’s March household spending posts biggest monthly rise in 18 months
- China’s factory gate prices jump as commodities rally
- Tech selloff extends in Asia on inflation fears, anti-trust crackdown
Upcoming Potential Catalysts on the Economic Calendar:
- Eurozone ZEW economic sentiment at 9:00 am GMT
- German ZEW economic sentiment at 9:00 am GMT
- U.S. NFIB small business index at 10:00 am GMT
- U.S. JOLTS job openings at 2:00 pm GMT
- BOE Governor Bailey to talk market rates at 2:30 pm GMT
- FOMC members Williams, Brainard, Daly, and Bostic to give speeches during the U.S. session
What to Watch: AUD/USD
Risk appetite and anti-dollar sentiment following a weak U.S. NFP report boosted AUD/USD high enough last week that the pair is now trading above a range resistance that had been solid since the start of March.Will high inflation concerns continue to haunt high-yielding bets like the Aussie? Recall that higher consumer prices will eventually limit economic activity unless we also see higher wages or more job creation.
But the Aussie will likely take limited hits because prices of commodities that Australia exports like copper and iron ore are the ones causing inflation jitters.
If today’s list of FOMC members’ speeches hint that the central bank will do something in the event that high inflation doesn’t turn out to be transitory, then we could see risk rallies and AUD/USD revisit its February highs.
But if traders continue to take profits from their risk trades, or if Fed members stick to their “inflation is transitory and we won’t do nothing until 2023” plan, then AUD/USD could revisit the .7800 previous support or test the lower Fib retracement levels before finding some support.