Australian dollars that produce roars and oil sinks. Will the AUD / USD start moving?

Australian Dollar, Crude Oil, AUD / USD, RBA, BOC, BOJ, ECB-Issues

  • NS Australian dollar Between higher yields and risk-off sentiment
  • The RBA did not defend its key interest rate targets prior to its meeting next Tuesday.
  • While interest rates are rising, commodities are being damaged.where AUD / USD??

Despite soaring domestic yields, the Australian dollar has remained largely unchanged today. The RBA sailed above 0.30% and did not uphold the April 2024 government bond interest rate target of 0.10%. The surprise of rising inflation yesterday is that bond traders are hoping for a pivot at the RBA monetary policy meeting next Tuesday.

The 10-year Australian Treasury yield exceeded 1.9% for the first time since March. Australian and US 10-year Treasury spreads widened to over 30 basis points in favor of Australian bonds (see charts in the technical analysis section below).

The lack of response by the Australian dollar may be due to the market entering risk-off mode today. NS JPY It was the best performing currency due to its defensive characteristics and declining energy market.

crude oil The Asian session continued to fall, making Norwegian krone the poorest performing currency of the day.except gold When Silver, Today, all energy and metal commodities are weakening.

oil It was already down in US time as inventory from the Energy Information Agency was higher than expected. Russian President Vladimir Putin has instructed Gazprom to send gas to Europe once domestic demand is met. Negotiations between Iran and the EU have also shown promising signs, adding hope that Iran may one day be able to export oil again.

The Bank of Canada became more hawkish than expected overnight. They stopped buying assets next month and paved the way for starting rate hikes next April.

The Central Bank of Brazil also raised its major Selic rate by 1.5% to 7.75% as the country is experiencing inflation of over 10%. The Bank of Japan did not change its monetary policy.

All this central bank hawks have seen bears flatten on most G-10 yield curves. Bear flattening occurs when the front-end yield rises faster than the back-end yield. This is seen as a potential sign that the bond market is priced in lower economic growth scenarios. Therefore, today is a risk-off day.

South Korea’s Kospi index tried to turn green after Samsung reported better earnings than expected, but all APAC stocks were weak. The Evergrande issue has also attracted investor attention as it will require another bond payment tomorrow to avoid default.

The ECB will then meet and ECB President Christine Lagarde will hold a press conference.

AUD / USD technical analysis

AUD /U.S. dollar It cannot exceed the 260-day simple moving average (SMA) and may continue to provide resistance. Currently it is 0.75412.

Prices have exceeded the 10-day SMA since early October and may provide support. Currently it is 0.7476. A break to either side of the 260-day or 10-day SMA could see a change in momentum.

The previous high of 0.75465 is a potential resistance level. On the downside, the previous low of 0.7449 may be the support level.

AUD / USD and AU-US 10 Year Yield Spread Chart

chart NSRating on TradingView

— Written by Daniel McCarthy, strategist at

To contact Daniel, use the comments section below or @DanMcCathyFX On twitter

Australian dollars that produce roars and oil sinks. Will the AUD / USD start moving?

Source link Australian dollars that produce roars and oil sinks. Will the AUD / USD start moving?

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